Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized THE WORLD BANK GROUP AFRICA REGION MACROECONOMICS AND FISCAL MANAGEMENT GLOBAL PRACTICE NOVEMBER 2017 ISSUE 10 http://www.worldbank.org/tanzania/economicupdate Managing Water Wisely The Urgent Need to Improve Water Resources Management in Tanzania TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION PAGE ii The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Table of Contents Foreword.................................................................................................... iii Abbreviations and Acronyms..................................................................vi Acknowledgements................................................................................ vii Executive Summary............................................................................... viii Part One: The State of the Economy....................................................... 1 Key Messages............................................................................................. 2 1.1 Recent Economic Developments................................................ 3 The Global Economic Recovery is Strengthening. ......................................................... 3 Tanzania’s Economic Growth has Softened................................................................... 4 Concerns Regarding the Business Environment Persist.............................................. 6 Inflation has Remained Low and the Exchange Rate Stable....................................... 8 The Current Account Deficit has Narrowed. ................................................................. 10 Fiscal Policy has Remained Tight but Payment Arrears are High.. ........................... 13 Monetary Policy Easing has not yet Translated into Better Credit Conditions.......17 The Poverty Rate has Fallen yet the Number of Poor Remains High....................... 18 1.2 Macroeconomic Outlook and Risks......................................... 20 Growth Outlook Remains Favorable but Faces Downside Risks..............................20 Sustaining High Growth in Tanzania Requires Deeper Reforms..............................22 1.3 Water Resource Use and Growth in Tanzania: Why It Matters............................................................................. 25 Part Two: Managing Water Wisely: The Urgent Need to Improve Water Resources Management in Tanzania........................................ 27 Key Messages........................................................................................... 28 2.1 Water Resources in Tanzania. .................................................... 30 2.2 The Role of Water in Tanzania’s Economy............................... 32 Water and Agriculture. ......................................................................................................38 Water and Energy.............................................................................................................. 41 Water for Industry and Cities..........................................................................................42 Water, the Environment, and Tourism...........................................................................43 Water Resources Trade-offs. ............................................................................................44 Valuing and Pricing Water................................................................................................48 2.3 Options for Improving the Management of Water................ 49 Annexes.................................................................................................... 55 PAGE i TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION List of Boxes Box 1: Performance of Tanzania’s Manufactured Exports. ...............................................................................................12 Box 2: Drought Impacts the Economy................................................................................................................................ 36 Box 3: Modernizing Agricultural Water Use....................................................................................................................... 40 Box 4: Water Quality Challenges are Growing................................................................................................................... 43 Box 5: Saving The Great Ruaha Requires Improved Water Management.................................................................... 52 Box 6: WRM Institutions Demonstrating Multi-sectoral Coordination: Mexico and Brazil....................................... 54 List of Figures Figure 1: Global Prices of Key Trade Commodities..............................................................................................................3 ........................................................................................4 Figure 2: Tanzania’s Growth Continues to Outpace EAC Peers. .............................................................................................................5 Figure 3: Sectoral Growth Rates in 2016 and 2017. Figure 4: Headline Inflation has Remained Low...................................................................................................................8 Figure 5: The Shilling Depreciated Slightly in Recent Months...........................................................................................9 Figure 6: Current Account Continues to Narrow................................................................................................................10 Figure 7: Decline in both Exports and Imports, June 2017, Year on Year Changes...................................................... 11 Figure 8: Capital Inflows and FDI Fell.................................................................................................................................... 11 ......................................................................................13 Figure 9: Fiscal Deficit has Remained Below 4 Percent of GDP. Figure 10: Domestic Revenue has Increased While Mobilization of Non-concessional Loans Remained Significantly Low..............................................................................................................................13 Figure 11: Recurrent Spending has been Controlled in Favor of Development Spending.........................................14 Figure 12: Payment Arrears to Suppliers and Pension Funds Remain High.................................................................. 15 Figure 13: Both Public Debt Stock and Service have Increased Significantly in Recent Years..................................16 Figure 14: Slowdown of Credit to both Government and Private Sector has Constrained Monetary Growth...... 17 Figure 15: Road Density and Electricity Production in Tanzania and its Comparators.............................................. 24 Figure 16: Lack of Skills is a Major Constraint to Both Low-skill and High-skill Firms in Tanzania......................... 25 Figure 17: Tanzania has Become a Water Stressed Country........................................................................................... 30 Figure 18: Tanzania still has a Reasonable Freshwater Endowment Compared to Some of its Neighbors, Though Values are Declining.. .......................................................................................................................... 32 Figure 19: Agriculture Dominates Water use..................................................................................................................... 33 Figure 20: Water Stress Varies by River Basin.................................................................................................................... 35 Figure 21: Slow-down in GDP Growth is Correlated with Severe Droughts in Tanzania’s Major Productive Basins..... 37 Figure 22: Since the late 1990’s, informal irrigation has Accounted for the Vast Majority of Irrigated Area in the Upper Great Ruaha River Sub-Basin............................................................................................................... 42 Figure 23: Planned Irrigation Schemes will Impact Hydropower Production in the Rufiji Basin.............................. 45 Figure 24: Irrigated Agriculture, Urban and Industrial Water Supply Rely on the Same Water Sources in Ruvu Sub-basin............................................................................................................................................................. 46 List of Tables ..................................................................... 40 Table 1: Tanzania Trails Many African Countries in Irrigation Efficiency.. Table 2: Descriptions of the Peculiarities of Valuing and Pricing Water....................................................................... 47 PAGE ii The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Foreword The Tenth Edition of the Tanzania critical to ensuring Tanzania’s external Economic Update contains the World balance. Prudent monetary policy continues Bank’s regular review of Tanzania’s economy to support the Tanzanian shilling and to and near term outlook, and a special maintain low and stable inflation rates. focus chapter on the pressing issue of water resource management. The report Secondly, the Government should comes at a critical juncture in the country’s intensify its efforts to implement its development history: the Fifth Phase development-oriented budget. The Government has outlined an ambitious Five-Year Development Plan II rightly vision for the country, in which it envisages aims to facilitate an ambitious increase in Tanzania becoming a semi-industrialized investment in human and physical capital. nation by 2025. Eighteen months on from To that end, the Government managed the plan’s inception, this report provides an to increase development spending by an update on the state of the economy and impressive 2.4 percentage points of GDP aims to make a positive contribution to the in 2016/17. However, the national budget challenges encountered. was still significantly under-executed, delaying important public investments and Part One of the report identifies the contributing to softened growth. In the short three most significant challenges facing term, the Government should prioritize the Government and outlines a pathway the increased mobilization of external to ensure growth momentum. Firstly, resources, especially on concessional the Government should continue terms, in support of debt management to implement measures to ensure objectives, to implement budget plans and macroeconomic stability. Prudent boost growth. Over the medium term, the monetary and fiscal policies will form the Government should continue to intensify foundation for any effort to boost growth the mobilization of domestic revenue and and to create productive jobs. Reforms to to prioritize investment plans and win-win control waste and corruption, such as the partnerships with the private sector. successful removal of thousands of ghost workers, are supporting prudent fiscal Thirdly, the Government needs to policies. Foreign investment will remain urgently implement measures to enable PAGE iii TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION and encourage the private sector to play that is critical to Tanzania’s economic a more significant role in Tanzania’s transformation is water. As Part Two of development. No country achieves large this report shows, water management and sustained industrialization and poverty can impact sector growth, resilience to reduction without a flourishing private economic shocks, and human development. sector. Growing businesses can finance the While recent quality data is scarce, all Government’s ambitious investment plans, indications suggest that sub-optimal water be a source of finance and innovation, management is already having a negative and create jobs for new entrants into the impact on Tanzania’s economy. job market. However, record low levels of private sector credit growth, a decline in Tanzania’s per capita water resources have foreign direct investment, and an increase declined to the extent that it has crossed in non-performing loans all indicate the the threshold that defines water stressed need to improve the environment for doing countries. There is now a compelling need business. To that end, the Government for the Government and all stakeholders could immediately undertake a number to manage this finite resource better. The of measures to support businesses and good news is that water does not have to to improve liquidity in the economy. In be a constraint on growth and poverty particular, the authorities should prioritize reduction in Tanzania. There are many the payment of verified arrears to private countries, including African countries, that sector contractors and suppliers and are developing successfully, despite having speed up the release of VAT refunds. far less water per capita than Tanzania does. Over the medium term, the Government Lessons from global experience suggest should continue to implement reforms to Tanzania could immediately implement four address structural constraints on private main measures to better manage its water. investment, such as the high cost of Firstly, the Government needs to ensure regulatory compliance and deficiencies in stronger coordination across sectors infrastructure services and skills. By doing and better prioritization of investments. so, the Government could harness the Since water is a finite good, trade-offs in potential of the private sector as a partner its use must be made. Better coordination in development to create employment and among policy makers will lead to smarter accelerate poverty reduction. investments. Improving the prioritization If used effectively, Tanzania’s natural of investments will require increased resources will also play a vital role in its harmonization and coordination between development trajectory. Tanzania has a ministries, sector plans, and budget rich and diverse endowment of natural allocations, and the political will to make resources, but their use needs to be trade-offs. managed effectively. One natural resource PAGE iv The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Secondly, Tanzania needs to value and use cannot be made in one area or sector price water appropriately to incentivize without considering the trade-offs with other its sustainable use, while also recognizing sectors. There needs to be clarity regarding its social and environmental value. This the mandates of relevant ministries and means setting prices that reflect water’s governmental bodies, supported by the growing scarcity, creating disincentives for appropriate intergovernmental structures to wasting water, and recognizing its differing determine coordinated action. Furthermore, values to farmers, municipalities, and these entities need to be appropriately industrialists. However, this will also have to resourced to implement their water- be backed by measures to raise awareness management functions. and to encourage collaboration between water users. In addition, there is a need The overall message of this report is that to build institutional capacities and the Tanzania needs to optimally use its existing political will to enforce a fair system of water resources, including its diverse and growing management. private sector and its rich natural resources, if it is to achieve its ambitious development Thirdly, Tanzania’s water management goal of becoming a semi-industrial, middle bodies need better information as a basis income nation. for decision-making. This means greater investments in the collection of data related to water resources and usage, including Bella Bird through the use of advanced technology. Without this information, it will remain Country Director for Tanzania, Malawi, extremely difficult to ensure the appropriate Burundi and Somalia. management of this vital resource. Although basic information is available in parts of Tanzania, the quality of this information is insufficient to inform the decision-making processes that Tanzania must undertake. Finally, the Government should clarify the mandates of the institutions responsible for water-resource management, ensure these institutions are properly resourced, and ensure that enforcement systems are effective. Because of the finite nature of water resources, decisions regarding their PAGE v TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Abbreviations and Acronyms ASDP Agricultural Sector Development Programme BoT Bank of Tanzania CIA Central Intelligence Agency DSA Debt Sustainability Analysis EAC East African Community EU European Union FAO Food and Agriculture Organization FDI Foreign Direct Investment FYDP Five-Year Development Plan GDP Gross Domestic Product IM Industry & Mining IMF International Monetary Fund IT Information Technology LGA Local Government Authority MDA Ministries, Departments and Agencies MFI Multilateral Financial Institutions MITI Ministry of Industry, Trade and Investment MOFP Ministry of Finance and Planning MSME Micro, Small and Medium Enterprises NBS National Bureau of Statistics NFA Net Foreign Assets NPL Non-Performing Loans PPP Public Private Partnership SAGCOT Southern Agriculture Growth Corridor of Tanzania TNBC Tanzania National Business Council TANESCO Tanzania Electric Supply Company Limited TASAF Tanzania Social Action Fund TAZARA Tanzania-Zambia Railway Authority TDV Tanzania Development Vision TFP Total Factor Productivity TZS Tanzanian Shillings UN United Nations US United States USAID United States Agency for International Development VAT Value Added Tax WBG World Bank Group PAGE vi Region The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa region Acknowledgments The Tenth Edition of the Tanzania Bella Bird (Country Director for Tanzania, Economic Update series was prepared Burundi, Malawi, and Somalia), Abebe by a joint World Bank team of the Adugna (Practice Manager for MFM, Macroeconomics and Fiscal Management Africa), Jonathan Kamkwalala (Practice and Water Global Practices. The team Manager for GWA, Africa), and Preeti Arora included Jacqueline Tront, John Wearing, (Country Program Coordinator) provided Yutaka Yoshino, William Rex, Steven guidance and leadership throughout the Dimitriyev, Neema Mwingu, Nadia Belhaj, preparation of the report. Iain Menzies, Emmanuel Mungunasi, and Joshua Mwakasege. Bill Battaile provided Irfan Kortschak provided editing overall supervision. Sebastien Dessus, assistance, while Grace Mayala, Neema Marcus Wishart and the IMF Tanzania Clarence, MaryIrene Singili, Abdulaziz team provided useful insights, which Muhile, and Loy Nabeta managed the benefited the report. designing and printing of the report. PAGE vii TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Executive Summary The tenth edition of the Tanzania sectors driving overall growth to 7.8 percent Economic Update covers the state of for the quarter. Despite the softening, at the economy and includes a near term these levels, Tanzania was amongst the outlook, with a special focus chapter strongest performers in the region. The on one of the most cross-cutting inflation rate has remained low and stable. determinants of development outcomes, The slight decline in exports in the first half water resource management. Part One of 2017 was more than offset by the decline presents a discussion and analysis of in imports, leading to a narrowing of the Tanzania’s recent macroeconomic and fiscal current account deficit. By mid-2017, foreign performance, with an updated outlook for exchange reserves increased to more than the near term. Part Two presents an analysis five months of import cover, while the value of Tanzania’s management of its water of the shilling remained stable. resources, showing that the management of these resources has massive implications The economy is facing two important for Tanzania’s people, its economy and its and related challenges, specifically environment, and that there is an urgent the under-execution of the national need for improvements. budget and the decline in private sector sentiment. The Government has reoriented Part One. State of the Economy the national budget towards development, with development expenditure increasing Tanzania’s economic growth has by 2.4 percentage points of GDP in 2016/17. softened, with the rate declining to 6.8 However, the budget execution rate remains percent in the first half of 2017, compared low, creating concerns regarding the to the figure of 7.7 percent recorded in credibility of the budget and constraining the same period in 2016. The decline the Government’s ability to achieve its in the growth rate recorded in the final ambitious development targets. Another quarter of 2016 (5.6 percent) persisted factor undermining the credibility of the into the first quarter of 2017 (5.7 percent). budget relates to the persistently high The rate increased in the second quarter level of Government payment arrears to of 2017, with growth in the transportation contractors and suppliers. These arrears not services, construction and agriculture only negatively impact the profitability of PAGE viii The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa region affected businesses and their ability to invest and i). Clearing verified Government payment grow, they also reduce liquidity. Combined, these arrears to private sector contractors and two factors are constraining Tanzania’s potential to suppliers: To be effective, this would require achieve higher levels of private sector-led growth. the allocation of significant resources and the implementation of strengthened controls to Tanzania is going through a period of policy prevent the further accumulation of arrears. transition, which has created uncertainties. The The clearance of current arrears and the Magufuli administration has prioritized efforts to prevention of their future accumulation improve public administration, to clamp down on would directly improve the cash and corruption, and to strengthen the tax administration. borrowing positions of many small- and While these efforts are well intended, the transition medium-sized domestic firms and reduce has caused uncertainty within the private sector. the high level of non-performing loans in There appears to have been an overall deterioration the financial sector. It could also improve the in business sentiment due to the perceived risks credibility of the budget and reduce the risk resulting from the unpredictability of policy actions premium applied by contractors involved in related to the Government’s intensified efforts Government projects. to collect revenue and to its anticorruption drive, which has delayed payment of Government arrears ii). Speeding up VAT refunds: The authorities to suppliers and contractors and VAT refunds. If the could further increase liquidity and directly policy transition in these key areas is prolonged, improve the cash positions of private a further weakening of private sector sentiment sector enterprises by clearing the backlog could lead to lower levels of private investment of VAT refunds. It could also implement and reduced growth, which in turn would impact measures to ensure a faster repayment on future revenue flows. On the other hand, the process and to conduct risk-based auditing. business sector has also acknowledged the positive These measures would support business impact of a number of the Government’s recent investments, including by exporting firms. actions, including in the transportation services iii). Securing external financing to fund on- and coffee sectors. going and planned capital expenditures: The Government could implement immediate Adequate financing is required both measures to significantly boost economic to complete on-going projects and to growth in the near term. In particular, measures implement new ones effectively. While the to improve budget implementation and the Government should continue to implement business environment could facilitate the reforms to increase domestic resources, achievement of the Government’s growth targets. in the short term, it will need to mobilize Specifically, these measures could include: additional external financing, particularly on concessional terms, to ensure debt sustainability. PAGE ix TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Over the medium term, while the growth The situation is compounded by droughts, outlook is favorable, it faces significant floods, and degraded water quality, all of downside risks. On a positive note, which are already having significant impacts Tanzania’s economy has been resilient on the economy. to external shocks, with key risks being both mostly domestic and under the The availability of water resources Government’s control. The more effective impacts the economy through three main implementation of the budget, increased pathways: it enables or constrains sector policy predictability to encourage private growth; it exacerbates or mitigates economic investment, and policies to support more shocks resulting from droughts and floods; affordable access to credit and to reduce the and it impacts human productivity through costs to business of regulatory compliance, public health and welfare: will be the key determining factors for i). The water requirements of different Tanzania’s near-term outlook. Over the economic sectors vary, with medium term, as the FYDP II rightly agriculture currently using the emphasizes, increased investment to develop vast majority of Tanzania’s utilized human and physical capital, particularly water resources. Agriculture is highly to address Tanzania’s infrastructure and dependent on water resources and is skills gaps and thereby to support the the primary user, accounting for 89 emergence of a more competitive economy, percent of the total use in Tanzania will facilitate the achievement of Tanzania’s (against a global average of 70 goals of becoming semi-industrialized, percent). In Tanzania, manufacturing middle income country by 2025. is dominated by agro-processing, which is also highly dependent on Part Two. Managing Water Wisely: water, as is mining, tourism and The Urgent Need to Improve Water energy generation. Thus, a key Resources Management in Tanzania challenge is to reduce the large With Tanzania’s rapidly expanding quantity of water consumed by economy and population, its water agriculture, while also increasing resources have recently declined to below food production. This will ensure 1,700 cubic meters per capita, the threshold that water is available to facilitate the level below which a country is considered achievement of development goals to be water stressed. Furthermore, this related to industrialization, energy average figure masks significant seasonal production and water supply. and geographic variations. In particular, ii). Droughts and floods have a major in the dry seasons, the ratio between economic impact on Tanzania, with Tanzania’s national demand for water and the extent of this damage likely available supply stands at 150 percent. PAGE x The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region to increase with ongoing climate Given that water is a finite resource, its change. The agricultural sector use needs to be prioritized to facilitate suffers an estimated US$ 200 million the achievement of Tanzania’s social, in average annual losses because of economic, and environmental goals. weather-related incidents, particularly Trade-offs in water use, such as between from drought. Earlier this year, the often-conflicting needs of agriculture aggregate food prices increased by 12 and hydropower production, are already percent due to drought-related food occurring. The Government’s challenge is shortages. Hydropower production, to ensure that the necessary information is which accounts for around 42 percent available and the appropriate institutional of energy generation in Tanzania, also framework is in place to effectively manage declines during droughts, creating trade-offs between different uses. major additional generation costs. The implementation of an effective Economic models show that in water resource management policy and neighboring Zambia, a severe drought the establishment of the appropriate event is likely to result in a 7.5 percent supporting legal framework is a cross- increase in the national poverty cutting issue that must be prioritized. rate. Given their similar economic Tanzania has already established broadly structures, Tanzania is likely to be appropriate water resource policies, legal similarly impacted. frameworks and institutional arrangements. iii). Water plays a critical role in However, the resources allocated have reducing poverty, improving health been insufficient to address the challenges, and increasing human productivity. which undermines implementation and Tanzania is making progress towards enforcement. In addition, establishing a increasing household access to water pricing system for water would involve supplies, with 63 percent of the significant challenges. population currently having access Specifically, improving Tanzania’s to basic and improved water supply management of its water resources will services. On the other hand, only 27 require; percent of the population has access to basic and improved sanitation. i). Strengthened coordination across Improved access to water supplies and sectors and the appropriate sanitation services are an essential prioritization of investments: The component of Tanzania’s sustainable Ministry of Water and Irrigation, the economic growth strategy. National Water Board and Basin Water PAGE xi TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Board should be equipped with the utilize satellite data and advanced necessary information, capacities, technology to improve the quality of resources and authority to fulfil their data and to make it available across mandates. In particular, a key part of Government and to end-users to inform their role is to ensure that the main their water use decisions. consumers of water (agriculture, energy, iv). Clarify the mandates of the industry, tourism, etc.) are able to make institutions responsible for water- better informed decisions regarding resource management and ensure its use. All stakeholders should they are properly resourced: It understand the issues and be involved is critical to ensure that the water in water management. Strengthening management and development investment prioritization will require mandates of the relevant ministries the harmonization of budgetary and governmental bodies are clear and allocations and multi-sectoral plans and complementary. Improved capacity to a willingness to make tradeoffs at the carry out water-management functions, highest levels. including permitting, monitoring and ii). Valuing and pricing water enforcement, is required at all levels. appropriately: Tanzania needs to value and price water in ways that reflect its increasing scarcity and that recognize its differing values to all users, including households, farmers, and industries. In particular, it needs to create disincentives to discourage wasting water. For example, in the Wami-Ruvu Basin, at present bulk raw water prices are so low that running a tap for an entire year would cost around US$ 2.60. iii). Information to improve decision- making: Sufficient resources should be invested in data collection and analysis to better enable water management bodies to make sound decisions. At present, data on water quality and groundwater is very limited. Water management institutions could better PAGE xii The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region 1 The State of the Economy PAGE 1 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Part One: The State of the Economy Key Messages „„ Tanzania’s economic growth has softened, with the rate declining to 6.8 percent in the first half of 2017, compared to the figure of 7.7 percent recorded in the same period in 2016. However, Tanzania was still amongst the strongest performers in the region. The inflation rate has remained low and stable. The slight decline in exports in the first half of 2017 was more than offset by the decline in imports, leading to a narrowing of the current account deficit. By mid-2017, foreign exchange reserves increased to more than five months of import cover, while the value of the shilling remained stable. „„ Fiscal and monetary policy challenges remain. Persistently high domestic payment arrears (at around 6 percent of GDP at the end of 2016/17) and the low execution rate of the development budget (62 percent in 2016/17) threaten the credibility of the budget. A looser monetary policy has yet to translate into a reduced cost of borrowing for the private sector or into increased private investment, partly because of the continued uncertainty. The financial sector remains stable, though the Government’s arrears have contributed to the high ratio of non-performing loans (about 11 percent at the end of June 2017). „„ Over the short to medium term, the growth outlook is favorable, with key risks being both mostly domestic and under the Government’s control. The growth rate is projected to reach 6.6 percent in 2017, slightly below the Government forecast of 6.9 percent, mainly due to the under execution of the development budget and the weak business environment. In the medium term, the main risks relate to a further deterioration in business sentiment as a result of increased policy uncertainty and to a decline in the execution rate of the development budget. The most significant external risks relate to a potential rebound in oil prices, volatile global financial conditions, and a decline in demand from Tanzania’s main export partners. „„ Near-term policy priorities should focus on improving the implementation of the budget and the business environment. Clearing verified payment arrears to private sector contractors and suppliers; speeding up delinquent VAT refunds; and securing external financing to increase the execution of planned capital expenditures are required to boost the economy in the near term. Over the medium term, the Government should implement structural reforms to increase private investment, including reforms to reduce the costs to business of regulatory compliance and to improve infrastructure services and skills. These reforms are vital to achieve higher economic growth and to create a greater number of productive jobs. PAGE 2 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa region 1.1 Recent Economic Developments African oil exporters, which on average experienced negative growth in 2016. The moderate increase The Global Economic Recovery is in oil prices is supporting growth in the region, Strengthening though the recovery remains vulnerable to further The global economic recovery is strengthening. price volatility. There is continuing uncertainty In 2017, advanced economies have been gaining regarding commodity markets, with the prices momentum, with recovery driven by increased of non-oil commodities expected to continue to domestic demand and exports. Rising investment recover, while the prospects for oil are dampened has helped to stimulate growth in global trade. by potential developments involving US shale.2 These more favorable global trends have been Tanzania has continued to experience relative supporting a recovery in Sub-Saharan Africa, with stability, helped by favorable terms of trade. the regional growth rate projected to increase to Tanzania continues to benefit from historically 2.6 percent over the year, up from a low 1.3 percent low oil prices and stable gold prices. Although in 2016.1 In particular, the region is benefitting from moderately higher than in 2016, oil prices remain a modest recovery in commodity prices, increased low by historical standards, with the price of Brent demand for exports, and more benign financial Crude averaging US$ 52.2 per barrel over the first conditions. nine months of 2017. As a net oil importer, the A modest increase in commodity prices has low oil prices have reduced Tanzania’s import bill. been supporting the growth in commodity- At the same time, Tanzania’s gold exports, which exporting African economies. The substantial represent around 30 percent of its total exports, decline in commodity prices since 2014 has had have benefited from stable prices (see Figure a particularly negative impact on Sub-Saharan 1), effectively improving the country’s terms of Figure 1: Global Prices of Key Trade Commodities Source: World Bank, World Commodity Prices 1 World Bank, Global Economic Prospects, ‘A Fragile Recovery’, June 2017 2 Ibid. PAGE 3 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION trade. However, Tanzania is vulnerable to a exceeded only by Cote D’Ivoire (7.9 percent) potential rise in oil prices and to a slowdown and Ethiopia (7.5 percent). However, the rate in demand from its major export partners in declined to 5.6 percent in the final quarter of the medium term. For example, during the 2016, significantly lower than the 8.0 percent first quarter of 2017, there was only weak recorded during the same quarter in 2015.3 growth in the demand from Tanzania’s major The economy continued to be constrained export partners, India, Kenya and South by a weak business environment, record low Africa, with the latter only recently moving levels of private sector credit growth, and out of recession. weak development budget implementation, especially in the case of capital projects. Tanzania’s Economic Growth has Softened On the supply side, the economic slowdown has persisted into the first half of Tanzania’s real GDP growth rate remains 2017, driven in particular by a deceleration one of the highest in the region, although in the growth of the services sector. During this growth softened during the last the first half of 2017, the real GDP growth quarter of 2016. At 7.0 percent, in 2016, rate was 6.8 percent, which is lower than the Tanzania’s rate of economic expansion 7.7 percent recorded during the same period exceeded that of any other EAC countries in 2016 (see Figure 2b). Except for services, (see Figure 2a). Across Africa, this rate was the growth of all economic sectors, including Figure 2: Tanzania’s Growth Continues to Outpace EAC Peers (a) (b) First half 2017 GDP growth 3 Quarterly GDP data from the National Bureau of Statistics (NBS) exhibit significant volatility related to seasonal- ity and provisional estimates are subject to significant revision. For example, the data on GDP growth for the first three quarters of 2016 was significantly revised upward upon release of the fourth quarter data. The NBS is receiving capacity building support on national accounts from the IMF. PAGE 4 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region the agriculture, manufacturing and non- at least partially driven by the removal of manufacturing sectors, recorded higher unqualified public servants.4 rates during the first half of 2017 than in the same period in 2016. In the first half of 2017, the growth rate of the manufacturing sector remained at The rate of expansion of the services almost the same level as that recorded sector declined significantly during the in the same period in 2016. The sector first half of 2017. This sector expanded at a expanded by 8.5 percent during the first half rate of 6 percent during the first half of 2017, of 2017, which is slightly higher than the rate more than 30 percent lower than over the of 8.2 percent recorded in the same period in same period in 2016 (see Figure 3a). This 2016 (see Figure 3b). The slight increase can decline has been driven by the continued be largely attributed to the slight increase in slowdown to the expansion of activities in the production of beverages. On the other the transport, education, real estate and hand, the non-manufacturing industrial financial subsectors. Public administration subsector expanded by 11.7 percent in the contracted by about 3.8 percent during the first half of 2017, which is 2.4 percentage first half of 2017. This contraction follows a points higher than the figure for the same period of significant expansion, especially period in 2016. This can be largely attributed during the first half of 2016, when the growth to the significant expansion of the mining rate reached 20.6 percent. The contraction and quarrying subsector5 (26.1 percent) and of public administration activities has been the water subsector (4.6 percent). Figure 3: Sectoral Growth Rates in 2016 and 2017 4 In early 2017 the Government conducted an audit of public civil servants to identify those without required quali- fication and ghost workers. This exercise resulted in the removal of about 10,000 civil servants from the govern- ment payroll. PAGE 5 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION While the agriculture sector recovered future growth, efforts should be directed at slightly, its rate of expansion remained measures that attract and sustain private relatively low. During the first half of 2017, investments in Tanzania. the agricultural sector expanded by 3.1 Concerns Regarding the Business percent, slightly higher than the rate of 2.7 Environment Persist percent recorded during the same period in 2016 (see Figure 3). The increased growth Recent Government actions have had a was largely due to increased crop production, mixed impact on the business climate which was attributable to favorable rainfall, and on investor confidence. Many in the especially during the rainy season. The business community have noted an overall growth rates for major crops such as maize, deterioration in business sentiment due to paddy, beans, round potato and sweet perceived risks resulting from unpredictable potatoes were impressive, ranging from policy actions and aggressive revenue between 7-11 percent. However, the growth collection efforts. The Government’s policy of the forestry subsector decelerated, with objectives of improving public administration, a rate of 1.5 percent during the first half clamping down on corruption, and of 2017, compared to 4.3 percent during strengthening tax administration are the same period in 2016. This deceleration positive. However, the transition has caused is largely due to increased efforts by the uncertainty, which has impacted private Government to conserve forests. sector investment decisions. In addition, a survey of 100 medium-size firms conducted On the demand side, the Government in June 2017 points to an improved but still scale-up of public investment has relatively low business sentiment (see Annex increased its contribution to economic 16).7 About half of the survey respondents growth. According to Government expressed the opinion that the economy data, gross fixed capital formation has had declined since the previous year, while contributed significantly to GDP growth less than one third expressed the opinion over the past few years.6 During 2014-2015, that it had remained the same. Looking this was supported by major inflows of forward, about 40 percent of the managers FDI in the natural resources sectors. More were pessimistic about the prospects for the recently, Government has rebalanced public economy, and 36 percent were pessimistic expenditure toward development projects, regarding their own businesses, a significant and thus increased the share of public increase to the proportion that expressed contribution to total investment. To sustain the same opinion in December in 2016. Only 5 Mining includes gold, limestone, natural gas, and coal. 6 Data on the composition of aggregate demand between the domestic private sector, government and net trade is only available on an annual basis from NBS. Thus, the demand-side analysis presented here covers through calendar 2016. 7 The views of business managers of the top 100 mid-sized companies in Tanzania have been collected every six months since April 2013. However, in December 2016, it was collected after 12 months. This data is collected by KPMG through electronic questionnaires, with anonymous responses. PAGE 6 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region about 30 percent of survey respondents The Government has recognized these were optimistic regarding the prospects for concerns and begun to take actions to the economy and their own businesses. address them, thus aiming to improve the overall business environment and The private sector has cited several specific investment climate. In particular, the areas of concern, including the following: Government has placed renewed emphasis „„ Overzealousness in tax collection: on engaging with the private sector by A number of private sector operators conducting high-level dialogue meetings. have reported incidences of inflated Three important meetings of this sort have tax bills, threats of business closure or been held in 2017, as follows: (i) the first imprisonment, and the solicitation of high-level consultative dialogue between bribes by tax officials; representatives of the private sector; the „„ Delays in VAT refunds and payments Ministry of Industry, Trade and Investment to contractors and other suppliers: (MITI); and the Ministry of Finance and Delays in VAT refunds are partly Planning (MoFP), held in April 2017; (ii) the attributable to the lengthy verification Tanzania National Business Council (TNBC) process for refund claims, conducted meeting, chaired by the President of Tanzania as part of the anti-corruption drive. and held in May 2017; (iii) and the second However, when VAT refunds and private sector-MoFP/MITI consultative payments to contractors and suppliers dialogue meeting, held in October 2017. The are delayed, businesses suffer from cash Government has committed to ensuring that flow shortages and are less incentivized going forward, it will consistently engage in to be compliant; and thematic and sectoral dialogue with the private sector on critical issues, including to „„ Proliferation of regulatory authorities, take stock of progress in the implementation licenses, taxes and charges: Tanzania’s of agreed upon actions. private sector activities are burdened by Other positive actions by the Government the need to comply with a multiplicity to boost the private sector include the of laws and regulations, involving following: payments for licenses, taxes and other charges, with many regulatory bodies „„ The removal of the 18 percent VAT with overlapping mandates. Many of on ancillary transportation services: the associated regulatory compliance In July 2017, with the promulgation of procedures lack transparency and the Finance Act 2017, the Government create excessive burdens for businesses. eliminated the VAT on transit cargo These burdens are disproportionately to neighboring land locked countries. intense for MSMEs, which often lack the This measure was implemented after necessary resources to understand and consultations with the private sector comply with the cumbersome rules and indicated that the introduction of procedures. VAT had negatively impacted trade PAGE 7 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION volumes at the port of Dar es Salaam. completed a comprehensive analysis of In a subsequent dialogue meeting, the the current regulatory environment, with private sector representatives reported an inventory of identified constraints that the measure has had a positive and with recommendations on how to impact, with an increase in the volume address them. The full implementation of transit cargo through the the Dar es of these recommendations is expected salaam port; to have a significant positive impact on the business environment, although „„ Reduction of agricultural cess: For a consistent monitoring and verification long time, the private sector in agriculture will be required to ensure that the has expressed concerns regarding the measures have their intended impact. high rate of agricultural cess, which it claims constrains investments in the Inflation has Remained Low and agriculture sector. Responding to these the Exchange Rate Stable concerns, in July 2017, the Government reduced the agricultural cess from a The inflation rate has remained low and maximum of 5 percent to a maximum close to the authorities’ medium term of 3 percent, although measures are still target of 5 percent. The headline inflation necessary to ensure that this decision is rate declined to 5.3 percent in September implemented consistently; and 2017 (see Figure 4), down from a high of 6.4 percent in March and April 2017, with „„ Completion of the ‘Blueprint to Reform the decline driven by lower food and energy the Business Environment’: Through a prices. Food inflation went down from consultative process with the private 11.8 percent to 9.8 percent over the same sector, the Government has recently Figure 4: Headline Inflation has Remained Low PAGE 8 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region period, largely due to improvements in food by about six percent and against the US production following good rains in April and dollar by about two percent over the same May of 2017. By contrast, the rate for energy period. The real effective exchange rate8 increased from 7.4 percent to 10.9 percent, appreciated slightly during the period from largely due to the increase in global oil prices January-March but has stabilized since (from around US$ 51 per barrel in March April. The depreciation of the Tanzanian and April to US$ 53 in September 2017). The shilling against the Euro and Indian rupee non-food inflation rate has remained low, was more pronounced than against the US standing at 3.1 percent in September 2017. dollar, Chinese yuan and the Kenyan shilling. Since April 2017, the value of the shilling has After remaining relatively stable remained stable against all major currencies throughout 2016, the value of the except for the Euro and Chinese yuan. By Tanzanian shilling depreciated slightly September 2017, the shilling has depreciated against a number of major currencies in further against the Euro by about 13 percent 2017 (see Figure 5). The shilling depreciated since March 2017. The recent interventions slightly in recent months. For example, the by the Bank of Tanzania in the interbank Tanzanian shilling depreciated against the foreign exchange market, especially by Euro by about 9 percent over the period from purchasing foreign currency, have helped January-March, after remaining relatively to prevent a substantial appreciation in the stable throughout 2016. Similarly, the value of the shilling. shilling depreciated against the Indian rupee Figure 5: The Shilling Depreciated Slightly in Recent Months 8 The real effective exchange rate is calculated as the weighted average of bilateral real exchange rates with Tanzania’s top five trading partners. PAGE 9 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION The Current Account Deficit has 25.5 percent while agricultural commodities Narrowed increased by 11.7 percent. However, export in manufacturing and other goods fell by In 2017, a decline in imports has led to a 46.5 percent and 18.7 percent respectively, narrowing of the current account deficit. while the export of services increased by a The current account deficit, excluding grants, mere 2.5 percent. declined to 3.1percent of GDP in May 2017, from a figure of more than 9 percent of GDP Despite declining capital inflows, as recently as 2015 (see Figure 6). Export international reserves have increased values declined by 6.2 percent over a one- due to the narrowing current account year period ending in May 2017, while import deficit (see Figure 8). Both FDI and non- values declined by 16.7 percent (see Figure concessional loans declined in the first half 7 a and b). All major categories of imports of 2017. By June 2017, inflows of FDI had (oil, transport, capital equipment, services) reached a value of US$ 1.5 billion, while the declined except for food, which increased disbursement of non-concessional loans by 13.8 percent over the period. The decline stood at about US$ 400 million, which was was pronounced in transport and capital far lower than the projected figure of US$ 800 equipment as well as services. The decline million budgeted for the 2016/17 financial in imports is largely attributable to the year. The decline in FDI inflows is attributable slow implementation of public investment to the decline in exploration activities, projects and the scaling down of exploration especially in the natural gas sector, while the activities in the natural gas sectors. low disbursement of non-concessional loans is explained by the Government’s cautious The value of exports fell by 6.2 percent approach to borrowing from foreign lenders in the year ending May 2017, with due to the high cost of those loans. By May manufacturing exports declining to an 2017, the level of reserves remained high, even greater extent (about 46 percent) standing at about US$ 5.3 billion, equivalent (see Figure 7a and Box 1). Over the period, to about 5.2 months of import cover. mineral commodity exports increased by Figure 6: Current Account Continues to Narrow PAGE 10 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Figure 7: Decline in both Exports and Imports, May 2017, Year on Year Changes Figure 8: Capital Inflows and FDI Fell PAGE 11 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Box 1: Performance of Tanzania’s Manufactured Exports The Bank of Tanzania (BoT) has reported a large decrease in Tanzania’s manufactured exports in 2017, noting that some of the decrease is due to classification changes from the adoption of the EAC’s Single Customs Territory. International data also suggests the decline coincides with softening of demand. Global manufacturing imports declined by more than 6 percent in both 2015 and 2016. In the sub-Saharan African region, to which Tanzania exports around 74 percent of its manufactures, manufacturing imports fell by more than a quarter in both years (see Figure 2). Imports of Tanzania’s four largest export manufactures (yarns, textiles, dyes and lime cement) collectively fell by 15 percent globally and by 46.8 percent in sub-Saharan Africa. Demand for Tanzania’s manufactured exports could improve as growth in sub-Saharan Africa is forecast to increase to 2.6 percent in 2017 and to 3.2 percent in 2018, as the terms of trade shock in commodity-exporters wanes.* However, Tanzania could still take steps to improve the performance of its manufacturing exports. The trade sector is particularly investment-intensive, meaning that improvements to the business climate that result in increased investment could have a disproportionate impact on traded manufactures, and help to increase the diversity and complexity of Tanzania’s exports. In this area, Tanzania showed a strong performance until 2013, when the complexity of its exports increased, though data for the last three years suggests a decline (see Figure 3). Finally, Nurturing regional trade will also support Tanzania’s goal of industrialization by increasing the manufactured content of its exports. Intra-African trade tends to be more industrial, with fewer regulations and smaller existing production bases.** Furthermore, 80 percent of Tanzania’s manufactured exports within sub-Saharan Africa go to the eight countries with which it shares a border. This points to the need to continue to invest in trade infrastructure and to improve Tanzania’s connectivity. * World Bank, Global Economic Prospects, ‘A Fragile Recovery’, June 2017 **Mufurki, A. et al. Tanzania’s Industrialization Journey, 2017. PAGE 12 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Fiscal Policy has Remained Tight recurrent expenditures were reduced to but Payment Arrears are High9 about 11 percent of GDP, down from the figure of 14-15 percent recorded in the The fiscal deficit stood at 1.7 percent of previous year. This reduced expenditure GDP in 2016/17, its lowest level in seven was achieved through measures including years (see Figure 9). Domestic revenue the removal of ghost workers from the civil collection increased to 15.3 percent of service payroll and limitations placed on GDP over the year, about one percentage foreign trips and allowances (see Figure point of GDP higher than in 2015/16, with 11 a). In addition, the under-execution of the increase supported by Government the development budget contributed to measures to control tax exemptions and the lower than planned fiscal deficit. The to prevent tax evasion and corruption (see deficit was largely financed through non- Figure 10 a). On the expenditure side, 10 concessional borrowing. Figure 9: Fiscal Deficit has Remained Below 4 Percent of GDP Figure 10: Domestic Revenue has Increased while Mobilization of Non-concessional Loans Remained Significantly Low 9 The fiscal data for 2016/17 are based on preliminary actuals. 10 Due to data limitations, the noted increase in domestic revenue does not take into account the low repay- ments of VAT refunds. Accounting for this factor would be expected to significantly reduce the reported increase. PAGE 13 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Development expenditure increased to Port expansion, and the TAZARA flyover. 6.8 percent of GDP in 2016/17, up from Despite this increase, the rate of execution the figure of 4.4 percent recorded in the remained at a low 62 percent. The shortfall previous fiscal year, with the execution in disbursement of non-concessional and rate remaining at around 62 percent (see concessional lending, due in part to slower Figure 11 a). Development expenditure than anticipated project preparation, constituted 37.5 percent of total public contributed to the low development budget expenditure in 2016/17, up from an average execution rate (see Figure 11 b). The value of around 25 percent over recent fiscal years. of non-concessional loans stood at only 1.1 Key capital projects supported in last fiscal percent of GDP, about 0.7 percent of GDP year’s budget included the Kinyerezi power lower than the projected amount for the plants, the Julius Nyerere International year. Airport expansion, the Dar es Salaam Figure 11: Recurrent Spending has been Controlled in Favor of Development Spending PAGE 14 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region In 2016/17, the tightening of recurrent toward: (i) suppliers to central government; expenditures negatively affected (ii) suppliers to TANESCO; and (iii) pension important categories of non-salary funds (see Figure 12). The Government expenditure by local government has stated its commitment to address all authorities (LGAs) and line ministries three categories of arrears, which will help (MDAs). The amount of non-salary funds to restore its credibility with its suppliers transferred to LGAs was extremely low, at and to ease the tight liquidity conditions 56 percent of the budgeted amount for the in the country. Clearance of outstanding year (see Figure 11 c). The LGAs are charged arrears to central government suppliers and with the delivery of social services, such as contractors would deliver significant direct education and health, for which they largely benefits to the private sector, including to use funds transferred from the central the cash and borrowing positions of many government. The non-salary component domestic firms. Despite the Government’s of the recurrent budget at various MDAs, effort to verify and clear central government particularly the Ministry of Education and supplier arrears, the emergence of new Ministry of Health, was also reduced to less arrears has meant that the level has remained than half the amount budgeted for the fiscal high, at around 2 percent of GDP. Plans to year. Consequently, these and other line reduce pension arrears through the issuance ministries faced challenges in ensuring the of non-cash bonds has been announced adequate availability of vital supplies such as but is currently pending implementation.11 drugs and teaching and learning materials. Arrears to TANESCO’s suppliers remain at the same level as in previous years, pending Domestic payment arrears remain the preparation of the Government strategy unsustainably high, standing at around 6 to prevent and clear arrears in this category. percent of GDP at the end of June 2017. This includes three categories of arrears, In 2016/17, net domestic borrowing Figure 12: Payment Arrears to Suppliers and Pension Funds Remain High 11 Recently, the Government has discussed an alternative option involving merger of some pension funds to strengthen the financial position of the pension sector overall. PAGE 15 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION stood at only about -0.1 percent of GDP, In 2016/17, the cost of public debt service significantly lower than the 2.1 percent consumed about 12 percent of domestic recorded in the previous fiscal year. Net revenues (see Figure 13).12 The increased foreign borrowing stood at about 1.9 cost of debt service is explained by the higher percent of GDP, about 0.5 percent of GDP cost of borrowing and the short-term nature higher than in this year. The significantly of loans contracted from both domestic reduced borrowing from the domestic and foreign markets. Despite the increased market is a welcome development, since it public debt stock and cost of debt service, helps to reduce the crowding out of credit to Tanzania’s public debt appears to remain the private sector. sustainable.13 However, additional short- term borrowing could increase liquidity The level of public debt has increased vulnerabilities, especially if a significant by more than 30 percent over the last portion of new loans is contracted on the five years, although this debt remains domestic market. Thus, the debt portfolio sustainable at around 40 percent of GDP needs to be monitored closely, as the growth by June 2017 (see Figure 13). The increased of domestic debt could exacerbate tight level of public debt in recent years has liquidity conditions, while increased debt been driven by increased non-concessional service costs could reduce the fiscal space borrowing from both the domestic and for development spending. Also, an increase foreign markets. In recent years, Tanzania in borrowing will require additional effort to has borrowed significantly from the market to accelerate investment in badly needed access concessional loans, including from public infrastructure. Domestic debt the multilateral financial institutions (MFIs). constituted 20 percent of total public debt in 2016/17. Figure 13: Both Public Debt Stock and Service have Increased Significantly in Recent Years 12 However, including rolling over of the matured TBs, the debt service to domestic revenue ratio stood at about 40 percent in 2017/18. 13 The latest joint World Bank / IMF debt sustainability analysis was completed in June 2016. An updated DSA is planned by the end of calendar 2017. PAGE 16 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region The 2017/18 budget targets an overall Monetary Policy Easing has not fiscal deficit of 3.8 percent of GDP, about yet Translated into Better Credit 0.8 higher than in the previous fiscal Conditions year’s budget, to accommodate higher levels of development expenditures. The To stimulate lending and investment, Government has set an optimistic target for the Bank of Tanzania has reduced the collected domestic revenue of 16.6 percent discount rate twice in the space of six of GDP, 1.3 percentage points of GDP higher months.14 However, the impact of this than in the previous fiscal year. Recurrent easing has yet to be realized. In March expenditures will continue to be controlled 2017, the Bank of Tanzania reduced the and limited to around 11 percent of GDP. discount rate from 16 percent to 12 percent, Development expenditures are projected to the first time it has lowered borrowing costs increase to around 10 percent of GDP, with since 2013. In August 2017, it again reduced a large share directed to the development the discount rate, to 9 percent, to boost the of transport infrastructure (railway, port and power) and education programs. This supply of credit to the private sector. Despite increased development expenditure is these measures, the growth of credit to the intended to support the implementation of private sector has remained low, at a rate of the FYDP II and to facilitate the achievement 1.0 percent in July 2017. This is significantly the goals of industrialization and human lower than the figure of 15.2 percent development. The challenge for the recorded in July 2016 (see Figure 14). The Government will be three-fold: (i) meeting growth of credit to the Government has also the ambitious revenue mobilization target; remained negative. The slow growth of credit (ii) improving the capital budget execution has resulted in limited growth in the money rate; and (iii) ensuring that new arrears do supply (M3). By July 2017, M3 grew by 5.8 not emerge. percent, slightly lower than the figure of 6.9 Figure 14: Slowdown of Credit to Both Government and Private Sector has Constrained Monetary Growth 14 The discount rate is the interest rate at which the Central Bank lends to commercial banks. PAGE 17 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION percent recorded in July 2016. Despite the 17.8 percent and 37.7 percent respectively. Bank of Tanzania pursuing an expansionist These ratios are higher than the statutory monetary policy, liquidity conditions have requirement levels of 10 percent and 20 remained tight, partly due to the tight fiscal percent respectively. Overall, the banking policy stance. This, together with the weak sector has remained profitable, although business sentiment, has contributed to a profit margins have been reduced by the softening of growth, particularly in sectors increased level of NPLs. The ratio of NPLs such as real estate, where credit growth has stood at about 11 percent in June 2017, up been the weakest. from the 8.2 percent recorded in the same month in the previous year, and well above The easing of monetary policy has not the Bank of Tanzania’s regulatory guidance yet translated into lower interest rates on limit of 5 percent. This has prompted the Bank loans. The overall nominal lending interest of Tanzania to strengthen its supervision of rate increased by about 2 percentage points the sector, including by directing banks to between July 2016 and July 2017, while the ensure that their NPL ratios remain under overall real lending interest rate declined by the 5 percent limit. The Bank of Tanzania about 0.2 percent during the same period. has continued to remind banks to utilize The increase in the nominal lending interest information provided by the Credit Reference rate partly reflects the risk associated with System to reduce credit risks. In addition, it the declining quality of banks assets, with should be noted that there is considerable a higher ratio of NPLs. This points to the variation across banks, with some banks need for both short- and long-term reforms. recording significant losses. In the short term, these reforms should The Poverty Rate has Fallen yet aim mainly at tackling demand-side factors and the lack of investment opportunities the Number of Poor Remains High in the current business climate. In the long Tanzania has made some progress towards term, reforms should aim to address the reducing the poverty rate, which fell from structural challenges that banks may be 59.9 percent in 2007 to 48.8 percent in facing in extending credit to the private 2012 (based on the US$ 1.90 per capita sector, including through measures to per day global poverty line). Since 2012, reduce the cost of risk and to reduce rates, the downward trend is expected to have such as through measures to enable the continued, with the rate standing at an better selection of borrowers and through estimated 43 percent in 2016. The decline in improved recovery mechanisms. the poverty rate has been accompanied by The banking system has remained stable, gains in human development outcomes and despite the deteriorating quality of living conditions. Gains in health outcomes banking sector assets. In May 2017, banks have been the driving force for this progress, maintained capital and liquidity ratios of with robust gains in education outcomes PAGE 18 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region and incomes as well. Access, completion and farm employment and a higher level of equity in primary education have improved, engagement in cash crops, which resulted with the rate for progression to secondary in higher returns to household businesses level education surging from about 20 and commercial agriculture and, to a lesser percent in 2000 to almost 60 percent extent, to returns to labor in the public and 2012. Housing conditions, ownership of private sectors. Improved ownership of assets, and access to clean drinking water communication and transportation assets, and improved sanitation have on average coupled with better access to roads, have also improved for Tanzanians, including for facilitated increased access to markets and the poor and rural populations. Despite earning opportunities for poor households, this remarkable progress, 20.6 million further contributing to better returns on Tanzanians were living below the global their economic activities. However, these poverty line in 2012, the latest year for which positive results are tempered by the limited survey data are available, with this number gains accruing to the poor and the clustering expected to have increased to about 21.3 of a large share of non-poor population million in 2016 due to population growth. right above the poverty line and thus being Using the national poverty threshold, around prone to falling back into poverty. The shift 12 million people were living in poverty in in the sectoral composition of employment 2012, earning less than US$ 1.4 per day per driving the observed improvements has capita (at 2011 PPP). Further progress will largely resulted in increased employment in depend on the extent to which Tanzania traditional and mostly informal services and can implement reforms that will spur more is not yet generating a sufficient number of inclusive growth and to which it can build additional productive jobs. on its achievements in human development. Ensuring the full funding of LGAs will help Geographic disparities and the to maintain the gains achieved in education concentration of economic activities and health outcomes. may undermine pro-poor growth prospects. So far, economic growth has Continued efforts are necessary to been concentrated in predominantly capital- accelerate poverty reduction in Tanzania. intensive sectors and in large urban areas, Poverty has become more responsive to resulting in widening regional disparities growth during the second part of the past and income divergences. This is due to decade, with the absolute value of the growth both the expanding employment and elasticity of poverty increasing from 0.17 in returns opportunities in these sectors and 2001-07 to 1.02 in 2007-12. This implies a the greater ability of households in urban greater percentage reduction in poverty regions (which are endowed with higher rates in association with increases in average education and better access to services) to per capita income. These improvements take advantage of opportunities generated were associated with a shift towards non- by growth. Geographic disparities in terms PAGE 19 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION of access to basic services, coupled with 1.2 Macroeconomic Outlook the rapid expansion of the population, and Risks may further undermine inclusive growth Growth Outlook Remains prospects and lead to a marginal decrease Favorable but Faces Downside in the poverty rate but an increase in the Risks absolute number of poor. Higher and more equitable growth will require investments Tanzania’s short-term growth outlook in infrastructure and the modernization of remains favorable, with the growth rate agriculture. projected to increase from 6.6 percent in 2017 to 6.8 in 2018.15 However, these Tanzania’s level of productivity in the increases are premised on the recovery services and agriculture sectors remains of agricultural production and non- low, constraining efforts to reduce manufacturing industrial activities, and poverty. The services sector has continued the scaling-up of investments in public to be the main contributor to annual GDP infrastructure. The performance of the growth. Most Tanzanians continue to find agricultural sector is projected to improve employment in low-productivity and largely as drought conditions ease and as demand informal services and agriculture, rather for agricultural products from domestic than in manufacturing, in which higher industries and regional markets increases. levels of productivity growth are recorded. The 2017/18 budget suggests an expansion Moreover, the modern service industries of expenditure on capital projects, which (such as finance and IT) cannot absorb if fully executed will support the growth a significant share of Tanzania’s largely outlook. unskilled labor force. However, the outlook faces several In addition to supporting growth and domestic risks. One of the most significant productivity in the agriculture and domestic risks relates to the unsustainably services sectors, the Government will high level of arrears, which continue to need to invest in the social sectors, such as impact budget credibility and to reduce education, skills development, health and liquidity in the economy. The key risk here is water (the latter is the subject of Part Two that competing budget priorities could lead of this report). In addition to fully funding to an insufficient allocation of resources to the development budget, the Government clear the stock of arrears, or that controls will also need to ensure that levels of non- remain insufficient to prevent their further salary recurrent expenditure on items such accumulation. as TASAF, capitation grants and medical supplies are maintained, as these are services that directly benefit the poor. 15 The World Bank growth projections for 2017 and 2018, are based on various domestic and global economic indicators, including recent provisional data. The projections are subject to adjustment based on updated information as it becomes available. PAGE 20 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Similarly, growth prospects could be as in the past due to the newly imposed weakened if there is no recovery to the restrictions on investment and trade, adding growth of credit to the private sector. to the effect of regulation and the higher Private investment will be constrained costs of doing business. if lending to the private sector does not increase. Government efforts to curtail The key external risk to growth relates borrowing from the domestic market to continued low global commodity are a positive development, but without prices. Low commodity prices could structural reforms and an improvement impact Tanzania’s economy through delays in business sentiment, the loosening of to investment decisions in the extractive monetary policy alone may be insufficient sectors, particularly natural gas. They could to stimulate lending and investment, with also have an adverse impact on the growth negative consequences for private sector prospects of commodity-intensive countries led growth. in the region, including Tanzania’s export partners. Under certain scenarios, low The growth outlook assumes a scaling- global commodity prices could also worsen up of investment in capital projects. Thus, Tanzania’s balance of trade. a slowdown in the implementation of capital projects may undermine growth. If global financial conditions again Although public investment has increased, deteriorate, this could impact the the Government continues to face budget implementation of capital projects and execution challenges, including arrears weaken the growth outlook. Some of accumulation, under-performance in Tanzania’s major infrastructure investments, the collection of domestic revenues and including plans to develop the standard borrowing. The impact of under-execution gauge railway and ports and airport of the 2016/17 Budget will be to further infrastructure, are planned to be financed complicate execution this fiscal year, as through external borrowing. Given the some projects are rolled over. significant under-performance of borrowing in fiscal year 2016/17, a continued tight A further weakening in business sentiment global financial condition could lead could lead to lower levels of investment the Government to delay further non- and growth. Further uncertainty regarding concessional borrowing. future policy changes could compound the impact of low liquidity and weak credit Finally, declining FDI could dampen conditions, deterring businesses from the expansion of activities in the urban making investments. Moreover, the future services sector. During the past decade, performance of the extractive industries the expansion of the activities in the urban and tourism sectors, the largest earners of service sector, such as real estate, transport, foreign exchange, may not be as impressive accommodation and food services, has PAGE 21 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION largely been driven by increased FDI inflows. status through industrialization and human The projected decline in FDI inflows, partly development. To achieve an average per driven by the scaling down of operations capita income of about US$ 1,200 by 2025, in mining and natural gas sectors, could Tanzania will require a sustained average have a significant impact on private sector annual real GDP growth rate of more investment and growth in urban service than 7 percent over the next eight years.16 sectors. With the current projected growth of 6.6 percent in 2017 and 6.8 percent in 2018, The growth outlook is expected to the achievement of middle-income status is contribute only marginally to poverty thus an ambitious goal that would require reduction. Tanzania’s poverty rate, based aggressive reforms to increase growth on the US$ 1.90 poverty line, is projected significantly from 2018. to decline marginally from 47.2 percent in 2017 to 46.9 percent in 2019. Despite this To meet the ambitious goals, the decline, the number of poor is expected to authorities should focus on both rise, as the population continues to grow. immediate policy levers and longer- The economic prospects for the poor—who term reforms. Over the short to medium are largely employed in the low-productivity term, the main enablers of growth in farming or urban informal service sectors— Tanzania related to three key factors: (i) the remain limited, with growth continuing to maintenance of macroeconomic stability; be largely concentrated in capital-intensive (ii) the implementation of policies to support sectors and in large urban areas. Although private sector investment and growth; and agriculture is projected to grow modestly, iii) the effective implementation of public this growth may disproportionately benefit investments. In all three areas, there are commercially-oriented farmers who are well measures that the Government could connected to either domestic or regional undertake relatively quickly, in addition to markets. reforms that will support growth over the medium term. Sustaining High Growth in Tanzania Requires Deeper First, the maintenance of macroeconomic Reforms stability is vital. Tanzania will need to Tanzania will need to accelerate its rate maintain domestic and external balances of economic growth if it is to fulfil the at least at current levels. Domestically, economic and development ambitions maintaining the fiscal deficit the targeted expressed in the Vision 2025 and FYDP II. level of around 3-4 percent of GDP will The country’s twin development strategies ensure the sustainability of the fiscal account and debt. The Government aim to achieve middle-income country should continue efforts to control recurrent 16 It is estimated that Tanzania will need annual per capita growth of around 4.6 percent to achieve a per capita income of around USD 1,200 in 2025. PAGE 22 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region expenditures and to mobilize domestic arrears to its suppliers. This would also revenue to create additional fiscal space increase the credibility of the Government‘s for public investments and the clearance budget and reduce the risk premium applied of arrears. Moreover, prices and exchange by contractors for Government projects. rate stability should be maintained to Further, the authorities could clear the incentivize firms and households to engage backlog of VAT refunds and ensure a faster in productive activity. Prudent monetary repayment process, which would support policies, including maintaining the recent investment and exporting firms. monetary easing, together with supportive fiscal policies, will be required to facilitate At the structural level, greater policy the achievement of increased credit growth predictability and advancing deeper and reduced costs of borrowing for the reforms will help crowd in private private sector. In terms of external balances, investment. The implementation of prudent a recovery and further growth in the value monetary and supportive fiscal policies would of exports would support the achievement help to ensure the private sector can access of a sustainable current account deficit that affordable credit to expand its investments. should continue to be financed by financial The consistency and predictability of flows, including declining FDI. private sector-related policies is vital to ensure long-term private sector investment Second, the private sector will play an and growth. The further elimination of essential role in maintaining high growth. levies and permits, including through Thus, measures such as the clearing of the implementation of the Government suppliers’ arrears and payment of VAT Business Streamlining Blueprint,17 refunds could help to promote growth together with other measures to streamline by addressing current concerns that taxes and administration, will be required. negatively impact the business climate. The Government should establish a clear The FYDP II foresees a substantial role for and transparent legal framework for private the private sector, including providing a sector participation in the implementation large proportion of the required funding. The of the FYDP II, including by reviewing the private sector will need to participate fully to existing PPP Act. drive the achievement of the Government’s industrial agenda, including by providing Third, Tanzania should accelerate its finance, if the Government is to realize investment in physical and human capital its central goal of ensuring that Tanzania to support both economic growth and becomes a semi-industrial economy by poverty reduction. There is an immediate 2025. Short-term actions can help improve need to expedite the Government’s the current cautious business environment. development plans, including infrastructure The Government could improve liquidity in projects, which would play a significant the economy by prioritizing and clearing role in accelerating growth. Tanzania needs 17 Business Environment Streamlining Blue Print PAGE 23 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION to maintain the recent increase in public Saharan Africa, less than a third of the figure investments and to catch up after the for Ghana, and one seventh of the average investment rates of 0.5 percent recorded figure for low middle-income countries. during the 2000-2015 period. However, there Tanzania‘s skills gaps are also massive (see remains a significant gap between domestic Figure 16) with 80 percent of Tanzania’s revenues and the resources needed to workforce of 26 million people being finance the investments envisaged by the unskilled (UNIDO) and with 30-40 percent FYDP II, without which the transition to an of the jobs for skilled positions advertised industrial economy by 2025 will be difficult in Tanzania being unable to attract to achieve. The Government will need to appropriately skilled applicants (according maximize the use of concessional financing to a study by the Association of Tanzania to scale up investment while maintaining a Employers, ATE). sustainable level of debt. While it is necessary for Tanzania Tanzania continues to lag behind its peers to accelerate investment in public in terms of infrastructure stock and skills, infrastructure and human capital, it is which poses serious challenges to the also necessary for it to strengthen the country‘s industrialization agenda. For management of these investments. example, Tanzania’s average road density Public expenditures have been reprioritized per square kilometer is just half of the figure towards development spending, particularly for sub-Saharan Africa while it is a third in the transport, energy and human of the figure for Uganda and one fifth of development sectors. However, projects the figure for Ghana (see Figure 15). The will need to be appropriately prioritized picture is similar for energy production and to ensure that they are fully funded and consumption. Tanzania’s average electricity completed on time to drive future growth. production per capita stands at 100 kwh, A lack of adequate funding for these which is almost half of the figure for sub- Figure 15: Road Density and Electricity Production in Tanzania and its Comparators PAGE 24 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region infrastructure projects could result in cost transformation will require both increases and time overruns. Moreover, maintenance to the levels of agricultural productivity of the planned infrastructure should be and increased diversification away from budgeted for or its positive impact on the agriculture and towards tradable and economy will be significantly reduced. The modern manufacturing and services Government will also need to prioritize sectors. Both transformations will need to skills development to support industrial be underpinned by the better management development. Tanzania will need to replace of resources. One natural resource that aging engineers, technicians and doctors. is critical to the achievement of this Moreover, improved skills in education, transformation is water. languages, IT, communication, technical and work ethics will require massive Water resources impact the economy improvements to education and training through three main pathways. These systems to support future growth through include: enabling or constraining sector increased industrialization and services. growth; economic shocks brought about by droughts and floods; and human productivity 1.3 Water Resource Use and through public health and welfare. Each Growth in Tanzania: Why It Matters of these pathways are currently a risk to economic growth in Tanzania. Addressing Tanzania’s natural resources will play a the risks requires concerted efforts by vital role in its progress toward poverty Government and other stakeholders: reduction and shared prosperity. While Tanzania has a rich and diverse endowment „„ Tanzania’s poor water resources of natural resources, some of these resources management threatens to constrain are used unsustainably while others remain growth and development. Renewable freshwater resources per person largely underutilized. Tanzania’s economic Figure 16: Lack of Skills is a Major Constraint to Both Low-skill and High-skill Firms in Tanzania PAGE 25 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION recently have dropped below the almost all Tanzanians livelihoods, while global water stress threshold of 1,700 sanitation services are vital for public cubic meters per capita, with these health. Global research shows that poor resources projected to decline to about sanitation can significantly increase 1,400 cubic meters per capita by 2025. child stunting, while adequate water Water is essential to the Government’s supply both improves public health industrialization plans, which require and reduces the amount of time that is increased electricity. While hydropower spent fetching and treating water. is the most obvious user of water for this purpose, gas and oil also Water is a finite resource and needs to require significant amounts of water be more carefully managed. Water use for extraction and cooling purposes. in public investments should be prioritized Industries such as mining, construction, and coordinated appropriately. The growing beverages, textiles and food processing demand for water in cities and industries are all water-dependent, and often needs to be better understood and planned sensitive to both the quality and for; the agricultural sector needs to make quantity of available water. Of course, the better management of water resources agriculture is the sector that is most central to its modernization strategy; and dependent on water and its biggest the critical needs of the environment for user. Agricultural modernization will water must be quantified and safeguarded. require the increased use of irrigation, Part Two of this report focuses on an especially as the crops targeted for analysis of the importance of better water expansion use water intensively. resources management for Tanzania’s long- term growth and for the achievement of „„ In the past 15 years, there have poverty reduction, with recommendations been seven significant droughts to suggest what the Government could do in Tanzania. Tanzania’s agricultural to reduce water stress and to encourage its productivity suffers an estimated average of US$ 200 million in annual effective use. losses because of weather-related risks, especially drought. Floods are also a significant risk in Tanzania, both to human life and economic assets. Building disaster resilience is therefore another necessity, involving significant economic challenges. „„ Water supply and sanitation services are vital for human development in Tanzania. Water is essential to PAGE 26 2 Managing Water Wisely: The Urgent Need to Improve Water Resources Management in Tanzania PAGE 27 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Part Two: Managing Water Wisely: The Urgent Need to Improve Water Resources Management in Tanzania Key Messages Tanzania is already water stressed, which negatively impacts the economy, society and the environment. „„ Over the last 25 years the Tanzanian population has doubled, the size of the economy has more than tripled, but the amount of water has remained the same. Water is a finite resource (unlike electricity, roads, food, housing, healthcare and most other inputs to the economy), so as need and demand for water doubles or triples, the result is growing water stress. The consequence is that Tanzania’s water resources recently dropped below 1,700 cubic meters per capita, meaning that Tanzania has joined the ranks of the world’s water stressed countries. „„ While this ‘average’ level of water stress is significant, real-world water stress is significantly higher during dry seasons and in drier parts of the country. Most rain falls in 2-3 months of the year, and after accounting for environmental flow requirements, national demand in Tanzania is already 150 percent of accessible water during dry periods. Since water and development is also unevenly distributed across Tanzania’s nine river basins, water stress also differs geographically. „„ In addition to water stress brought about by too little water, floods – or too much water – can also have severe economic impacts, as can degrading water quality, the changing distribution of water across seasons and locations, and the effectiveness of water supply and sanitation services. Water resources management requires trade-offs and prioritization, which will require tough decisions and action at all levels of government. „„ Water is, most importantly, a social good: people drink it every day, wash with it, and cook food with it. Access to sufficient water to meet basic needs is, quite literally, a matter of life and death. As an environmental good, water keeps alive the ecosystems on which the environment, people and the economy depend. And as an economic good, water is a critical factor of production and productivity. Given that water is a finite resource, the challenge is to purposefully and carefully manage the trade-offs between the social, environmental, and economic uses of water. PAGE 28 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa region „„ Tanzania is making progress in increasing access to water supply, where 63 percent of the population has access to basic and improved water supply services.18 Sanitation services, on the other hand, have a long way to go where only 27 percent of the population has access to basic and improved facilities. Improving access to sustainable services is vitally important to poverty reduction but also, through influencing public health and human productivity, the economy more broadly. Ensuring the sustainability of water sources for urban and rural water supply is critical, and while cities can be large water users at the local scale, the absolute quantities of water required for domestic use are relatively small (roughly 10 percent of water needs globally). „„ At present, around 89 percent of Tanzania’s water is used for agriculture (compared to a global average of 70 percent), around 10 percent for domestic consumption (like global averages), and about 1 percent for industry (very low by global standards). A key water resource management challenge for Tanzania is reducing the large quantity of water consumed by agriculture to ensure that water is available to meet development goals on industrialization, energy production and water supply. Implementation of the water resources policy and legal framework is a cross- cutting issue that must be taken seriously, capacitated and resourced. „„ Tanzania’s water resource policies, legal framework and institutional arrangements are broadly appropriate. Water Boards, representing some of the key stakeholders, are in place for each river basin, and most have developed medium-term water resource development and management plans. However, the number of staff and level of resources will need to be scaled up to be proportionate with the scale of the challenge. Similarly, strong political leadership will be needed to reconcile the range of formal and informal activities across all sectors with a sustainable level of water resource use. „„ Pricing water is a key implementation challenge and is important in three ways: to help make water services more sustainable; to create disincentives for wasting water; and to help allocate water towards more economically productive activities. While pricing water needs to be carefully managed to meet social, environmental and economic objectives, there is considerable scope for progress on pricing in Tanzania: water services are a long way from cost-recovery and bulk water costs are so low that running a tap for an entire year would cost around US$2.60.19 „„ Improving enforcement of current plans and regulations is the other key implementation challenge. This requires investing in improved monitoring systems, supporting the growth of water user groups, increasing resources for field-work, and strong political support for enforcement activities. 18 2015 WHO/UNICEF Joint Monitoring Programme. Washdata.org 19 The Wamu-Ruvi basin authority – which covers Dar es Salaam, Dadoma and Morogoro -- charges 1 Tanza- nian Shilling per cubic meters of bulk water supply. The final price charged to households would be set by the final service provider, and would include the costs of treatment, pipes, etc. PAGE 29 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION 2.1 Water Resources in Tanzania is now officially water stressed, Tanzania a consequence of growing demand on a finite resource (see Figure 17). Over the Tanzania’s development ambitions are last quarter century, Tanzania’s renewable dependent on water. There are, of course, per capita freshwater resources have many other factors that will influence declined from more than 3,000 cubic Tanzania’s development trajectory – meters to around 1,600 in 2014. This figure education, health, transportation, energy, will continue to decline, reaching around finance, etc. – but unless Tanzania improves 1,400 by 2025 (see Figure 17). This is still its approach to managing its water resources, well in excess of the 1,000 cubic meters per water will become a brake on progress. The person that is internationally considered to reasons for this are straightforward: be the threshold for absolute scarcity, but 1. Water is a key ingredient for development it is below the 1,700-cubic meter level that - the Tanzanian people, its economy, the United Nations considers countries to and the environment all need water to be water stressed. The experience of many survive and prosper; other countries shows that as the quantity of water becomes stressed, the quality 2. As the Tanzanian population and of water also deteriorates more rapidly economy expands, the demand for as multiple users compete to extract the water increases; most from the water they have. Crossing 3. Water is a finite and local resource – this symbolic “water stress” threshold is a water cannot be economically created or warning signal for the Tanzanian economy moved to different parts of the country. and people: action on water resources is needed, and it is needed now. Figure 17: Tanzania has Become a Water Stressed Country Source: World Bank Open Data PAGE 30 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Water in Tanzania is not well distributed in rainfall are highly uncertain, as model geographically or temporally - this means projections do not agree on whether it will that water is not always available when increase or decrease in Tanzania. However, and where people, businesses and the even now, climate change is aggravating environment need it. Rainfall in Tanzania has water scarcity and further degrading water a high-degree of seasonal and inter-annual quality as the rise in temperature increases variation, which complicated the already aridity and is likely to increase the prevalence water-stressed context. For example, in the of prolonged drought and flood events. south, most annual rainfall is received in two Water borne pollutants are also intensified to three months of the year, which means by the rise in temperature. With climate that surface water becomes extremely change, Tanzania will have to deal with scarce during the remaining nine months increasing challenges of scarcity, variability, of the year causing people and businesses and quality. to rely on difficult-to-access groundwater or the small amounts they can store for their Water does not have to become a livelihoods. The annual rainfall variation significant constraint to growth and from one year to the next can be as much prosperity, even though pressure on as 400 percent,20 so Tanzania is constantly 1718 Tanzania’s water resources are growing. bouncing between flood and drought. In Tanzania still has a reasonable per capita the past 15 years, there have been seven water resource endowment compared to significant droughts, leaving the country in a some of its neighbors, however values are constant state of drought-recovery (See Box rapidly declining due to the high population 2 on how drought impacts the economy.) growth rate (see Figure 18). The challenge is Without well-planned systems, capable of how to manage water better, and in particular, storing water to curb the excesses of flood to allocate water to uses that maximize the periods and provide regulated quantities of economic, social and environmental benefits water during drought, Tanzania will suffer for the country. This challenge of allocation increasingly from water stress. Increasingly, is at the heart of the water resource the impacts will be felt in the economy and management challenge facing Tanzania, but in people’s lives and livelihoods. is far from the only one: the remainder of this chapter discusses the role of water in the Climate change is exacerbating Tanzania’s economy, key water resources challenges water stress. Climate change is increasing facing Tanzania, Government’s plans and spatial and temporal variations in rainfall, approach to addressing them, and concludes while rising temperatures (projected to with recommendations for making water increase 2-4 degrees by 2050). This is management work in Tanzania. likely to result in increasing aridity, which could increase water scarcity. Future trends 20 Mahongo, S.B. and Francis, J. 2012. Analysis of Rainfall Variations and Trends in Coastal Tanzania. Western Indian Ocean Journal of Marine Science, Vol. 11, No. 2. PAGE 31 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Figure 18: Tanzania Still has a Reasonable Fresh Water Endowment Compared to Some of its Neighbors, Though Values are Declining. World Bank Open Data 2.2 The Role of Water in on water, and other light manufacturing, Tanzania’s Economy which also require water. Mining also directly depends on water availability. For tourism Water requirements of economic sectors and services, the dependence on water vary, with agriculture currently using is often indirect; animals and landscapes the lion’s share of water in Tanzania. that tourists pay to see depend on water Agriculture is highly dependent on water and perish without sufficient water in the and is the primary user, withdrawing 89 river and wetland systems. Furthermore, percent of water in Tanzania (see Figure 19). energy production directly relies on water, Manufacturing in Tanzania is dominated by which indirectly links manufacturing, agro-processing, which is highly dependent PAGE 32 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region mining, tourism and service industries to economy towards competitiveness”22 where water resources as well. Because of the agricultural expansion is slated to underpin many direct and indirect linkages between food security and sustain the population, water and the economy, the various water industrialization is dependent on agricultural challenges Tanzania faces all result in expansion and energy production, and economic consequences, as summarized in hydropower production is required to meet the table below. energy requirements – all of these are required for competitiveness. In many of Figure 19: Agriculture Dominates Water Use21 the river basins across Tanzania, the planned use of water is more ambitious than what can actually be supported by available water resources. After accounting for environmental flow requirements, national demand in Tanzania is already 150 percent of accessible water during dry periods. This figure is on pace to balloon to 216 percent by 2035.23 Even today, water used in each of the basins exceeds available water in the Source: World Bank Open Data dry season – this means that rivers run dry The link between water resources and the and water-users don’t have the water they sectors that drive the economy becomes need for productive uses (see Figure 20 for challenging when the existing or planned months over-allocated during a dry year). use of water is greater than supply, a not This also means that difficult decisions lie uncommon occurrence in Tanzania. The ahead in Tanzania to ensure that water many water-dependent sectors must work is used for the optimal benefit of society, together to meet Vision 2025 economic the economy and the environment (see goals based on “transformation of the tradeoffs section below). Scarcity Lost economic opportunity and activity due to insufficient water Floods Destruction of assets, disruption of services, etc. Quality Reduced economically available water / greater cost to use water; impacts on human health and productivity; degrading ecosystems Seasonal or temporal Water not available when needed; reduced productivity; droughts bring variation particularly severe human, economic and environmental consequences. Geographic Growing scarcity in some parts of the country with surpluses in others; distribution impacts on spatial distribution of economic opportunity Water supply and Improved or reduced health and productivity sanitation services 21 Data derived from World Bank open data based on FAO AQUASTAT tool. Note that the latest available data FAO AQUASTAT for Tanzania is dated from 2002. 22 The United Republic of Tanzania Planning Commission. 1999. The Tanzania Development Vision 2025. http://www.mof.go.tz/mofdocs/overarch/vision2025.htm. 23 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis. PAGE 33 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION This link between economic growth and that Tanzania could expect a similar level of water is particularly strong in Tanzania. economic vulnerability to water resources In a 2008 assessment, the Total Factor (see Box 4 on drought impacts on the Productivity of Tanzania (TFP), a measure of economy). efficiency and competitiveness which serves as the key determinant of economic growth, The dependency on water is not just a was found to be 40 percent dependent on “here and now” challenge for meeting day- water infrastructure.24 The water input to to-day energy and agricultural production TFP in Tanzania is higher than in many other requirements. Water needs will inevitably Sub-Saharan African countries. Taking a increase as the market demand and growing global view, some regions of the world could population require even more consumer see their growth rates decline by as much as goods and services (see Figure 20). 6 percent of GDP by 2050 because of water- related losses in agriculture, health, income, and property—sending them into sustained negative growth. In those same regions, the study showed that economic growth could increase by 6 percent if appropriate water management policy measures and infrastructure are in place.25 In neighboring countries, advanced economic modeling has shown significant economic vulnerabilities due to water resources. For example, in Zambia, a one- year severe drought is projected to reduce GDP growth rate by 6.6 percent; a severe flood would cause a 2.3 percent reduction. These growth impacts were expanded to estimate their effects on poverty, showing that a 7.5 percent increase in the national poverty rate would be the likely consequence of a severe drought event. With its similar economic structure, it might be expected 24 Escribano, Alvaro, J. Luis Guasch, and Jorge Pena. 2010. Assessing the Impact of Infrastructure Quality on Firm Productivity in Africa; Cross-Country Comparisons Based on Investment Climate Surveys from 1999 to 2005. Policy Research Working Paper 5191, Africa Infrastructure Sector Diagnostic. World Bank. Washington, DC. January 2010. P. 63. 25 WBG (World Bank Group), 2016. High and Dry: Climate Change, Water and the Economy. P. vi. PAGE 34 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Figure 20: Water Stress Varies by River Basin.26 9,855,272 11,301 MCM Big Demand: 6,533,114 6,869 MCM Deficit Months: 7 Big Demand: Deficit Months: 7 5,718,221 4,846,173 11,968 MCM 7,049 MCM Big Demand: Big Demand: Deficit Months: 6 Deficit Months: 11 6,955,276 4,207 MCM 2,448,458 Big Demand: 6,195 MCM Deficit Months: 6 Big Demand: Deficit Months: 7 3,527,078 11,916 MCM Big Demand: 1,715,123 11,451 MCM Deficit Months: 7 Big Demand: Deficit Months: 7 3,827,029 22,732 MCM Big Demand: Deficit Months: 8 Energy Agriculture Livestock Industry & Mining Over Allocation of Water Occurs Across Tanzania Farmers, industries, cities and hydropower facilities all plan their operations based on the assumption that a steady volume of water is available „„ During a dry year or a drought, planned water use is often more than the amount of water that comes down the rainfall „„ When demand for water exceeds rainfall, a water deficit occurs; during a deficit period, one or more sectors or stakeholders doesn’t get the water it needs „„ Data shown here is for a dry year and the whole country experienced a deficit of six months or more „„ As the economy and population grow, this deficit will become the norm even during normal years Source: Climate Research Unit Data 26 The number of deficit months by basin during a dry year was derived using demand figures from 2008 and four available water from the Climate Research Unit Dataset during 2003. When demand exceeded available water supply in any given month, that month was considered a deficit months. PAGE 35 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Box 2: Drought Impacts the Economy Droughts are already a frequent occurrence in Tanzania, and their force is often severe. Tanzania has suffered numerous significant droughts over the past 20 years (eight years out of twenty in the Pangani Basin alone), with a resulting loss of productivity in the food, energy, and industrial sectors that threatens future growth (see Figure 21). In sub-Saharan African countries, growth in the agricultural sector is reduced by an average of 3.5 percent as a result of each drought.27 In Tanzania, the agricultural sector suffers an estimated US$ 200 million in average annual losses because of weather-related occurrences, largely due to drought.28 As recently as April 2017, a drought led to food shortages and to an increase in aggregate food prices of 12.0 percent, with repercussions throughout the region.29 In another example, a significant drought in 2009 resulted in the mortality of 80 percent of livestock in northern Tanzania, undermining the achievement of local and national food security and longer- term development.30 Hydroelectric energy production also declines as a result of droughts. In 2009-2011, upstream withdrawals for agriculture and a prolonged drought reduced surface water flows and reservoir levels in the Rufiji and Pangani rivers, the main sources of hydropower production in Tanzania. The reduced flows significantly decreased hydropower production.31 TANESCO, the national power utility, had to employ a costly emergency power generation program that involved imported diesel and the production of power at a substantial variable cost, whereas the variable cost for hydropower is quite low.32 The emergency power generation program employed to address the 2010/2011 drought resulted in huge additional costs for Tanzania. 262728 293031 27 Examination of agriculture value-added growth in relation to droughts over the decade 2003 to 2013. From: FAO (Food and Agriculture Organization of the United Nations. 2015. The impact of disasters on agriculture and food security. November 2015. P. 46 28 Arce, C. and J. Caballero. 2013. Tanzania Agricultural Sector Risk Assessment. World Bank Agriculture Global Practice Note. Washington, DC. P. 3. 29 IMF (International Monetary Fund). African Dept. 2017. United Republic of Tanzania IMF Country Report No. 17/180.Sixth Review Under the Policy Support Instrument and Request for a Six-Month Extension of the Policy Support Instrument . July 2017. P. 4 30 Melewas, J. and R. Allport. 2010. Assessment of the Impact of the 2009 Drought on Pastoralist Livelihoods in Northern Tanzania. FAO. 31 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis. 32 Peng, D. and R. Poudineh. 2016. Sustainable electricity pricing for Tanzania. University of Oxford Institute for Energy Studies. OIES Paper: EL 20. July 2016. P.58 PAGE 36 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Box 2 Continued Figure 21: Slow-down in GDP Growth is Correlated with Severe Droughts in Tanzania’s Major Productive Basins.33 Slow-down in GDP growth is correlated with severe drought in Tanzania „„ Downturns in the economic growth rate are often concurrent with drought „„ The drought index shown here is a measure of how severe the drought is, assessed through soil moisture and surface water availability „„ Because of regional and global weather patterns, drought may occur in one part of Tanzania while another area (another basin) may be unaffected. „„ This graphic shows droughts occurring in three economically important basins, and highlights the concurrence of severe drought and downturns in economic growth Source: Prenston Africa Draught Monitor Data 33 This plot shows the GDP growth rate (%) in Tanzania and displays the drought index quantiles from the Princeton Africa Drought monitor data. These data are based off established categories of the Palmer Drought Index. The thresholds for Drought Severity are 35% for mild drought, 30% for moderate drought, and 20% for severe drought. The GDP growth rate data is from the World Bank. This plot includes boxes around years where growth rate has decreased. PAGE 37 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Water and Agriculture driving consumption in agriculture even higher. Tanzania’s national development The agriculture sector withdraws around goals emphasize the need to move from a 89 percent of water in Tanzania, however “predominantly agricultural economy with this figure must decrease to meet the low productivity to a diversified and semi- country’s growing municipal demand industrialized economy with a modern rural and industrialization goals. Agriculture sector and high productivity in agricultural is by far the biggest user of water around production which generates reasonably high the world, accounting for an average of 70 incomes and ensures food security and food percent of water use globally. As countries self-sufficiency.”37 In spite of this higher- develop it is usual to see this percentage order goal, Tanzania’s massive plans for drop significantly, both because agriculture’s irrigation expansion have not fully factored share in the economy drops over time as the in the current water stress or the major industrial and manufacturing sectors grow, needs of other sectors and uses, including and because the agriculture sector tends to the environment, urban supply, hydropower become more efficient and productive with generation and planned industrialization water as it modernizes. Thus, Tanzania’s agricultural sector must Agriculture is essential to the Tanzanian undergo a transformation that enables it economy and society, however the need both to reduce its use of water resources for a shift in agricultural approach is and to increase its level of productivity. well understood. In Tanzania, agriculture Global experience demonstrates two currently contributes to around 31 percent somewhat counterintuitive trends related to of the country’s GDP, 34 with agricultural the transformation of the agricultural sector commodities constituting 85 percent of as it becomes more productive. Firstly, it exports, and with the sector employing 35 consumes (as opposed to uses)38 a greater 68 percent of the country’s workforce.36 At amount of water to produce a given output. the same time, it accounts for 80 percent of Secondly, since increased productivity water use (see Figure 3). As temperatures drives higher economic returns, areas under rise due to climate change, crops will agriculture tend to expand – sometimes need even more water and evaporation leading to an increase in the total amount of and transpiration will only increase – water used. Reductions in the use of water 34 2016 Agriculture, Value Added (% GDP) data from World Bank Open Data, http://data.worldbank.org/. 35 CIA (Central Intelligence Agency). 2017. The World Factbook. https://www.cia.gov/library/publications/ the-world-factbook/geos/tz.html. 36 2014 Employment in Agriculture (Total % of Employment) data from World Bank Open Data, http://data. worldbank.org/. 37 The United Republic of Tanzania Planning Commission. 1999. The Tanzania Development Vision 2025. http://www.mof.go.tz/mofdocs/overarch/vision2025.htm. 38 The distinction between water use and consumption is important for maximizing the economic value of water. Some activities, such as hydropower, use water and then release it largely unchanged for other downstream uses; others, such as agriculture, consume water, removing it from the immediate water cycle through evapotranspiration. PAGE 38 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region resources while increasing agricultural However, each of these are relatively water- productivity are achieved by concurrently intensive crops which will both create greater modernizing irrigation and improving water trade-offs with other users of water and management. increase the vulnerability of these crops to water variability. Shifting away from thirsty Improving water resource management crops in dry areas decreases vulnerability: in Tanzania is therefore primarily when a drought hits there is less water for about improving the way that water for everyone and water sensitive crops suffer agriculture is managed. There are several disproportionately. dimensions to achieving a significant shift in agricultural water use in Tanzania: the area Availability and more effective use of of land under cultivation; the water-intensity water are also important to small-scale or of the crops being produced; the efficiency subsistence farmers who need to balance or productivity of the water use; the extent the nutritional value of their crops with to which crops are either rain fed or irrigated; the amount of water and other inputs and an understanding of the relationship required to grow them. In Tanzania, between agricultural water use and the small scale use can become a very large local water cycle (for example, is much of scale use in the aggregate, as is the case the water ‘lost’ through evapotranspiration, in the Ruaha basin as descried below in or is much of the water returned to the local the Box on modernizing agricultural water cycle through runoff?). A good starting management. Establishing accurate data point is a reasonably accurate baseline study on water use by small-holder or subsistence to define the current situation, including farmers – which is often unregulated and both planned irrigation schemes (formal unmeasured – is difficult but important. irrigation) and unplanned, unregistered Improving water management will mean irrigation (informal irrigation). intensively working with poor farmers to help them optimize their use of water and Encouraging the development of a reduce their vulnerability, whether driven by prosperous agricultural sector and temporary phenomena such as droughts, expanded agro-industry is a sensible or long-term reductions in water availability. economic strategy, but needs careful Without support, small-holder farmers planning from a water-resource exacerbate the problem with informal management point of view. Food crops and inefficient irrigation schemes and / or such as maize, rice, cassava and beans as expand agriculture further into sub-optimal well as three of the most important cash land or precious natural habitats. 394041 crops by export value (coffee, cashew, and cotton), are all targeted for expansion.39 39 The United Republic of Tanzania. 2006. Agricultural Sector Development Programme (ASDP); Support Through Basket Fund. United Republic of Tanzania Government Programme Document. PAGE 39 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Box 3: Modernizing Agricultural Water Use There is a strong need to expand irrigated agriculture to meet food security goals, with only 1.5 percent of irrigable land currently being irrigated.40 There is an equally strong need to modernize irrigation practices in Tanzania to enable farmers to shift towards higher-value crops and to waste less water. More than 80 percent of irrigated land in Tanzania is farmed using traditional irrigation practices with rates of water use efficiency as low as 15 percent. This compares very unfavorably to other countries that have applied modern water use systems, and recorded rates in excess of 90 percent as a result of proper distribution, conveyance and field application systems being in place.41 Crop-yield is also particularly low in unregulated irrigation systems in Tanzania, where a combination of poor structural design and the overuse of water due to inadequate pricing can result in water logging, reduce crop-yield, increase prevalence of aquatic weeds and diseased crops, and restrict crop type to paddy rice rather than cash crops or more nutrient-dense crops. Without an incentive to save water, farmers are not motivated to modernize farming practices to reduce water loss and to improve the productivity of their farms. When water is given an explicit value, and is regarded as a quantifiable input for agriculture, there is an incentive to use only the water that is needed. Farming and irrigation practices improve, and cropping patterns better reflect the reality of the environmental constraints. The result is higher crop yields, a shift towards higher value crops, and less wasted water. By better valuing their water, several neighboring countries have outperformed Tanzania in attaining higher country-wide aggregate irrigation efficiencies, demonstrating that Tanzania is capable of improvement (see Table 1). There is also a major water management gap in the area of allocations, monitoring and enforcement for small-holder farmers. In some areas, informal irrigated systems are larger than formal systems and expand when wet-season rains are more plentiful. This expansion of irrigation has dramatically increased the water requirements in several basins, to the point that water requirements now exceed water availability. For example, in the Great Ruaha River sub-basin, extensive informal irrigation (see Figure 22) is one of the major reasons that the perennial river now runs dry for between two and four months every year, creating hardships for down-stream uses, including subsistence agriculture, livestock, the Ruaha National Park, and hydropower production in the Mtera/ Kidatu System.42 The large proportion of unregulated water users makes it challenging for government to track, monitor and plan water allocations. Table 1: Tanzania Trails Many African Countries in Irrigation Efficiency. 43 Water Requirement Country Year Ratio (%) Egypt 2002 76 Algeria 2001 72 Uganda 2010 52 Senegal 2002 46 Burundi 2000 44 Botswana 2002 34 Niger 2005 31 Ethiopia 2001 28 Malawi 2002 27 South Africa 2000 27 Rwanda 2000 25 Kenya 2003 22 Tanzania 2002 22 Since the late 1990’s, informal irrigation has accounted for the vast majority of irrigated area in the Upper Great Ruaha River Sub-Basin. Source: 2030 Water Resource Group 40 (=450,392 ha/29.4 million ha). Data from: FAO (Food and Agriculture Organization of the United Nations). 2014. Tanzania National Investment Profile: Water for Agriculture and Energy. Pp. 4-5. 41 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis.. P. 5. 42 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis.. P. 34.. 43 The Water Requirement Ratio, a measure of irrigation efficiency, was calculated by dividing the irrigation water requirement per year (cu- bic meters) by the irrigation water withdrawal per year (cubic meters). Data from: Frenken, K. and V. Gillet. 2012. Irrigation Water Require- ment and Water Withdrawal by Country. FAO (Food and Agriculture Organization of the United Nations). Rome, Italy... November 2012. PAGE 40 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Water and Energy Tanzania has the potential to boost hydropower production, with a number Expanding electricity generation and of plans in the pipeline to manifest this access is a key priority for Tanzania’s potential. However, currently existing development – and is dependent on water hydropower systems in the country availability in key basins. More than 67 often underperform due to the limited percent of Tanzanians, and 83 percent availability of water resources. Current of the rural population, are still without power development plans include those access to electricity, and shortages of related to the expansion of hydropower electricity are cited as a major constraint to facilities in a number of locations across economic activities in business surveys44 the country, particularly in the Rufiji, Nyasa, In fact, Tanzanian companies are more likely Rukwa and Lake Victoria basins (see Figure to cite availability of electricity as a major 22). However, in several of these basins, constraint to their growth and operations the demand for water already exceeds than companies in eleven comparator supply. Depending on whether the planned countries in the region (Botswana, Ethiopia, hydropower projects are upstream or Ghana, Gabon, Kenya, Malawi, Mozambique, downstream of other major users, this may Senegal, Uganda, and Zambia).45 challenge the economic viability of some of In total, 42 percent of Tanzania’s electric these planned projects unless careful well- power is derived from hydropower. The planned water management systems are two other main energy sources are gas implemented. (42 percent) and oil (15 percent).46 Even at present, a number of current Both of these also require significant hydropower schemes, particularly those volumes of freshwater for fuel extraction, located in the Rufiji and Pangani basins, processing, and electricity generation.47 are not being operated at their full International experience shows that as potential because of water shortages countries’ economies become more energy (See the section on tradeoffs below). Since intensive, demands on water resources can energy generation is a long-term, capital increase significantly. In the United States, intensive business, the predictability of water for example, the biggest single use for water supply is a vital precondition for investment is for power generation. decisions, being critical to the viability of the plant’s operations and maintenance. 44 World Bank internal calculations based on the Government’s report titled Energy Access Situation Report 2016 -Tanzania Mainland 45 United Republic of Tanzania and the United States of America. 2011. The Tanzania Growth Diagnostic: Partner- ship for Growth (2011), a joint analysis for the Governments of the United Republic of Tanzania and the USA. p. 103. 46 2014 electricity production data from World Bank Open Data, http://data.worldbank.org/. 47 Sprang, E. S., W.R. Moomaw, K.S. Gallagher, P.H. Kirshen, and D.H. Marks. 2014. The water consumption of en- ergy production: an international comparision. 2014 Environmental Research Letters. Vol.9. PAGE 41 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Figure 22: Tanzania has Significant Hydropower Potential, if Water Availability is not a Constraint48 Source: Ministry of Energy and Minerals, Power Sector Master Plan (2016) and Ministry of Water and Irrigation, Basin Water Boards IWRMD Plans Water for Industry and Cities Tanzania and there is a growing market for beer. But in 2015, an inadequate supply of Water is also a key input to a wide range water stopped efforts of Tanzania Breweries, of industries, where reliable quantity and one of the largest breweries in the country, to quality of water makes a big difference expand in Mbeya. The company indefinitely to investment and expansion plans. shelved plans to install a second production Industries important to Tanzania such as line due to concerns and lack of confidence mining, construction, beverages, textiles and about available water sources.49 food processing are all water-dependent, and often sensitive to the quality of water As countries industrialize, focusing on as well as its quantity. These industries water-intensive products or crops for often do not require a huge proportion of export can disproportionately stress the total water allocation, but it does require a resource base. In Tanzania, overly water- predictable and guaranteed quantity at high intensive exports are not responsible for the quality to allow for the continuous nature current water stress.50 However, national and of industrial processing. In some regions in regional planners and trade entities must be Tanzania, a secure water supply, particularly sensitized to the need to carefully consider in the dry season, is becoming challenging the sustainability of the resource base as for industrial expansion. For example, beer they develop plans for expanding industry to production is one of the largest industries in fuel growth. 48 Hydropower plans derived from basin-level Integrated Water Management and Development Plans, re- gional planning documents and the Power Sector Master Plan. 49 WREM International Inc. 2015. Lake Rukwa Basin IWRMD (Integrated Water Resources Management and Development) Plan: Final Report; Volume I: Basin Plan. Technical Report prepared for the United Republic of Tanzania, Ministry of Water. Atlanta, Georgia, USA. Pp. 41-42. 50 http://waterfootprint.org/en/water-footprint/national-water-footprint/virtual-water-trade/ PAGE 42 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Box 4: Water Quality Challenges are Growing The troubling water scarcity issues in Tanzania are compounded by water pollution, which is steadily impacting water quality across the country, with the concentrations of sediment, salinity, fecal matter and chemicals increasing in rivers and aquifers. When water quality is degraded, it has significant negative impacts on human health, damages ecosystems and reduces the life-span and effectiveness of investments in irrigation and hydropower infrastructure. For example, in Dar es Salaam, less than half of the inhabitants have access to the main water network and instead use private and unlicensed boreholes. Overuse of the shallow aquifers under the city has led to drinking water contamination from sea water. Residents of Dar es Salaam also face health risks resulting from the poor disposal of industrial effluents and unimproved sanitation.51 Unfortunately, most of the evidence on declining water quality is anecdotal. There are huge knowledge gaps regarding water quality in Tanzania because there is not a sufficient monitoring network and there is limited industrial regulation. Improved information on water quality will help the Government make informed decisions about water resources to keep the Tanzanian people healthy and the economy running. 50 Concurrent to industrial growth, rapid for industry and cities. Predictability of urbanization is increasing the demand for water supply is partly about information urban municipal water supply at a pace about water availability, sustainable yield that outstrips supply. Major cities like Dar and source protection. Predictable water es Salaam, Arusha and Morogoro take their supplies are also largely about clear policies water from stressed rivers that do not have for managing trade-offs in the use of water, adequate source protection measures in partly about the ability to enforce those place, and aquifers that are not adequately policies, and partly about the ability to store mapped. Dodoma, the rapidly expanding and manage water in the face of increasing capital city, relies almost entirely on variability. groundwater for its supply. Most aquifers in Tanzania are not sufficiently mapped Water, the Environment, and or understood, so planners don’t know if Tourism they are withdrawing groundwater at a Tanzania’s rich and diverse natural sustainable pace or if they are following the resources, especially wildlife, are the basis path of so many cities worldwide towards for its thriving tourism sector – which is over-abstraction, ground-subsidence in turn the basis for GDP growth, foreign and water insecurity. Anecdotal evidence exchange and employment. About a third suggests that groundwater levels are of the country’s total land mass is under declining significantly in some areas. protection; one of the world’s highest ratios. Tanzania’s 16 national parks and 17 game Like energy, the predictability of future reserves, three marine parks, 15 marine water supplies – including the quality reserves, and multiple forest reserves of the water – is a key consideration are host to world renowned biodiversity, 51 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis. P. 4. PAGE 43 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION wildlife, and unique ecosystems, making the Australia, often considered one of the most country a prime global tourism destination. sophisticated countries in the world for The tourism sector contributed around 13 managing water scarcity, their flagship water percent of GDP in 2016 and provides a stable reform program in the Murray-Darling basin source of revenue and foreign exchange underestimated environmental water needs. for the government, as well as well- As a result, the Australian government remunerated jobs for more than 400,000 needed to purchase back a large amount people directly employed by the industry.52 of water entitlements to maintain sufficient Tourism also has significant cross-sectoral environmental flows. spillover effects and linkages to other sectors of the economy. A decline in tourism revenue In Tanzania, when environmental needs would have an impact on the exchange rate are considered, demand for water can be and the consequences would reverberate 150 percent of available water. This high throughout the economy. demand leaves virtually no water flowing to maintain the river ecosystem and wildlife In addition to their tourism value, that depend on water. For example, the Tanzania’s natural ecosystems also play an Ruaha river, a river that naturally flows especially important role in sustaining life year-round (a perennial river) has not had and livelihoods in rural, poor communities. any flow for more than 100 days for several Wetlands, forests and grass-lands play decades, with wet season flows now under central roles in maintaining freshwater threat. This situation endangers wildlife in supply and groundwater recharge, which Ruaha National Park and is compromising are important for rural drinking water the viability of highly water-dependent supplies. They also modulate surface water species such as the buffalo and the hippo.53 flow, reduce erosion and sedimentation, provide flood control assistance and more, The water scarcity challenges in the all of which help to secure villages and farms Ruaha are becoming increasingly likely against weather extremes. Perhaps most in the Northern regions. The gap in water importantly, they can provide alternative demand and availability is growing in the sources of food during drought or hardship. Pangani, Internal Drainage and Lake Victoria basins. The high demand and overallocation The needs of the environment are often in those basins threaten wildlife and underestimated or deprioritized during environmental systems in the north and will dry periods. Tanzania’s National Water Law become a risk for the more famous tourism (2009) places environmental requirements destinations the country’s economy relies as the second prioritized usage, just after on. societal/domestic supply. However, the environment cannot advocate for itself, and Water Resources Trade-offs when water is oversubscribed, environmental Where demand for water outstrips systems are often compromised. Even in availability, trade-offs between uses 52 WBG (World Bank Group). 2015. Tanzania’s Tourism Futures: Harnessing Natural Assets. WBG Report No. 96150-TZ. September 2015. P. 4. 53 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis. Pp. 25 and 34. PAGE 44 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region and users are inevitable. The important operating and fuel expenses associated with question is whether the trade-offs are alternative generation sources.54 deliberate, informed, and guided by policy, or whether trade-offs are simply driven by The Rufiji basin typifies the tradeoffs the capabilities of different actors to take the between agriculture and energy because water first. expanding irrigation occurs upstream of existing and planned hydropower. As Evaluating tradeoffs between energy one of the largest of Tanzania’s nine water needs and agricultural consumption is basins, encompassing 25 percent of national a challenge across Tanzania. Simulations river flow and 33 percent of national rainfall, of more than 1 million ha of additional the Rufiji basin is particularly targeted for irrigated areas in the basins of the Rufiji increasing development in both agriculture River, Lake Tanganyika, Lake Nyasa, and and hydro-electric power. A proposed US$3 the Pangani River show that irrigation billion investment under the Southern development in river basins that already Agricultural Growth Corridor of Tanzania support or will support hydropower would (SAGCOT) program, aims to expand decrease future hydropower production by commercial farming by 350,000 hectares, 8 percent on average or 1,300 GWh/year including increases in irrigated area by as even if irrigation efficiency were to improve. much as 721 percent in some clusters.55 If efficiency were to remain at its current Plans for expanding irrigation often occur level however, hydropower production could adjacent to and upstream of hydropower decrease by 24 percent or 3,900 GWh/year. schemes and current irrigation schemes are This would likely require TANESCO to spend all placed upstream of existing hydropower approximately US$360 million per year on schemes (see Figure 23). Figure 23: Planned Irrigation Schemes will Impact Hydropower Production in the Rufiji Basin. Source: Rufiji IWRMP, 2030 Water Resources Group, and SAGCOT Blueprint 54 WBG (World Bank Group). Internal Calculations. 55 SAGCOT (Southern Agricultural Growth Corridor of Tanzania). 2011. Southern Agricultural Growth Corridor of Tanzania: Investment Blueprint. January 2011. PAGE 45 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Figure 24: Irrigated Agriculture, Urban and Industrial Water Supply Rely on the Same Water Sources in Ruvu Sub-basin Source: Wami-Ruvu basin data, 2030 Water Resources Group and SAGCOT Blueprint Plans to expand irrigated agriculture are to ensure that new measures achieve the vast in spite of the fact that irrigation is desired purpose and don’t simply lead to already causing seriously depleted water increased agricultural abstractions. flows in the Ruaha sub-basins of the Rufiji, particularly during the extensive Plans for the expansion of irrigated land dry periods. Unless water is managed well must be reconciled with the competing – including water permitting and pricing, needs of other water users downstream, monitoring, enforcement, increased irrigation including plans for the development of efficiency, and new storage reservoirs – the hydropower generation facilities in the new irrigation schemes planned for the Rufiji basin. Hydropower potential in the Mpanga and Udagaji catchments in the Rufiji alone is five to ten times current levels Kilombero Valley will lead to zero river flow of generation, with corresponding increases in the dry season and major impacts on in revenues from US$172 million to $800 planned hydropower schemes. Other plans million, providing energy output two and to store water and regulate flow in the basin a half times the current national electricity must be carefully planned and include use.56 And both irrigation and hydropower stringent water management measures development need to be reconciled with 56 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis. P. 4. PAGE 46 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region other water users, including sufficient Illustrating the same point, in the Pangani flows (in quantity, quality, and seasonality) Basin, farmers and the power authority are for the world the environment (including currently suffering from the impacts from the famous Selous Game Reserve, the the lack of coordination in the context of Ruaha National Park and the heritage ever-increasing water scarcity. The New areas in the Rufiji delta). When considered Pangani Falls hydropower scheme cannot be independently each investment plan might operated as designed because current water make good sense, but considered together flows are insufficient to allow full operation. it is clear that greater coordination is needed In the same basin, the Lower Moshi Irrigation to consider downstream consequences and scheme was envisioned to be built in three to provide for a balance in water use that phases, but expansion beyond phase 1 is no meets the needs of everyone. longer feasible because of water shortages caused by uncontrolled water abstractions by upstream farmers. Table 2: Descriptions of the peculiarities of valuing and pricing water Valuing water: the realm of public Pricing water: the realm of revenues policy and social values and incentives Social purposes Clean water for basic human Many countries subsidize a limited consumption is highly valuable, and amount of water for basic household generally recognized as the highest needs, and increase pricing for greater priority use. Access to clean water is quantities. Price is useful for making recognized as a human right by the services more sustainable, and to UN convention. However, the value discourage wasting water. of water for less basic needs – from washing clothes to lush gardens – is much less clear. Ec o n o m i c The value of water depends on Price is a key tool for encouraging purposes the economic benefits that can economically optimized trade-offs be extracted from it. Water for across water uses: put simply, people manufacturing tends to be more who will extract greater financial valuable than water for agriculture, returns from water will be prepared to etc. Similarly, a guaranteed year- pay more for it. Price is also a key part round supply of clean water is much of creating incentives for greater water more valuable than water of varying productivity, efficiency, and reduced quantity and quality. wastage. Environmental The value of water for the environment Pricing environmental water is only purposes – often called environmental flows – meaningful where there is a buyer, is driven mostly by the value of the which would generally be a public ecosystem services that it enables. entity. While many see an intrinsic value to the environment, it is simple to understand it in relation to the sectors that it enables – such as tourism in Tanzania – and the services it provides, such as maintaining landscapes or protecting urban areas. Tourism also has a major economic role, propping up the exchange rate, providing a major contribution to GDP and employment. PAGE 47 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Decision makers in the Wami-Ruvu River worth describing some of the peculiarities are facing similar challenges through of valuing and pricing water in Table 2. tradeoffs between irrigation and urban water supply. The water supply plant Global experience shows that while at Mtoni – intended to supply the major pricing water can be a critically important population and industrial center of Dar es part of water allocation and managing Salaam - has operated at only 50 percent trade-offs around water, it needs to be of its design capacity since rehabilitation complemented by a strong regulatory due to the diversion of water by farmers approach. This is not only to ensure that upstream.57 These tradeoffs are shown social and environmental objectives are on the map of the Ruvu sub-Basin shown also met, but also to establish absolute use in Figure 24, where irrigated agriculture and consumption limits because water is is planned upstream of the water supply a finite resource. In the agricultural sector, intakes for both Morogoro and Dar es in particular, numerous countries have Salaam; both irrigated agriculture and city experienced situations where investments water supply rely on the same water source in water efficiency and productivity have led as industries in the industrial corridor which to increasing marginal returns, expanded is expanding between Morogoro and Dar es agriculture, and ultimately increased water Salaam. consumption. In water, price is important, but not a substitute for regulation. Valuing and Pricing Water Embracing the proper value of water is also A key part of encouraging more dependent on industry and government deliberative trade-offs in water use is working together to properly plan and to value and price water appropriately. manage water use to encourage industrial This requires understanding water’s social, growth and secure municipal supplies. economic and environmental value at a This means overcoming the current status particular time and place (the value of water quo in Tanzania, where many industries in the dry and wet season differs, as it does in urban areas have developed their own in water scarce and water rich basins), while water sources to avoid the constraints of to price water requires assigning a specific working within the current system. Thus, financial cost to it. Pricing water is often the quantity of water they use is often controversial because it is seen as a natural not accounted for and the wastewater resource belonging to everyone, because volumes discharged into receiving waters crude pricing approaches may reduce is of questionable quality and is often not access for the poor, and because no-one disclosed. Even where water permits have wants to pay for something that they have been issued, tariffs paid are generally not received previously for free or very cheaply. aligned with the actual quantity of usage Because of its controversial nature, it is due to the lack of monitoring. 58 57 WBG (World Bank Group). Internal Calculations. 58 2030 Water Resources Group. 2014. Tanzania: Hydro-Economic Overview – An Initial Analysis. P. 20. PAGE 48 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region 2.3 Options for Improving the 4. While managing trade-offs around Management of Water the use of water is a core economic challenge for Tanzania, in practice this This chapter has presented and summarized needs to be built around a strengthened some of the available evidence to make four system of information, institutions and key points: infrastructure, as described in more 1. Tanzania is already a water stressed detail below. country. Current trends suggest that Improved government planning, the problem is getting worse. While management and monitoring of water the greatest challenge is water scarcity, resources, which is built on a firm Tanzania also has significant challenges understanding by the government of with floods, declining water quality, and the country’s available water resources, growing variability in rainfall and run-off. will credibly and convincingly reassure 2. Tanzania’s economy is significantly industry that water needed for expansion dependent on water at both the macro is available. Sound and dependable and micro levels. Drought impacts on regulation will not just ease concerns about overall economic growth numbers, water needs for current operations, but while water is a critical ingredient will embolden needed future private sector for agriculture, tourism, energy, and investment. When water is prioritized and industry, which collectively account allocated based on a system that assigns for a large proportion of the Tanzanian real worth to it, and coordinated efforts are economy. in place to meet the needs of all stakeholders as well as the environment, then a clear 3. Water is a finite resource. The signal will be sent that Tanzania is not taking government must focus on how to water for granted. manage it better. Trade-offs in water use are already happening, but not in The reality is that meeting the water needs of Tanzania today and tomorrow is ways that maximize economic, social dependent on the decisions and actions and environmental returns. This is partly of users throughout the value chain. This because effective allocation institutions includes how farmers will irrigate their fields, and enforcement mechanisms are where corporate executives will build a plant, lacking, but also because water is not and how everyday households will carry out valued or priced in ways that shape day-to-day activities. It’s decision-making incentives for economic efficiency. Given that is not just the purview of policymakers that almost 90 percent of Tanzania’s and government officials, although they are water is used for agriculture, developing certainly on the front line when it comes to mechanisms for better managing water setting the water agenda in Tanzania. for agriculture is a key priority. PAGE 49 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Government officials and policymakers plan, and the others have the basic can lead the way to help people in Tanzania information needed to develop their face the tough choices and tradeoffs when plans. it comes to allocating water. Setting the � Strengthened coordination example and encouraging everyone to rise and better prioritization means to the challenge of addressing a sustainable equipping the Ministry of Water water future for Tanzania begins with and Irrigation, the National Water institutional reforms and better coordination Board and Basin Water Boards with within government, which can lead to information, capacity, resources smarter investments. and authority. These bodies must carry out the planning, awareness Specifically, making water work in raising, monitoring and enforcement Tanzania is dependent on four factors: measures that will ensure that the government’s long-term vision is 1 Multi-sectoral Coordination and achievable. Taking a close look at Investment Prioritization: Clearer the makeup of these Boards and criteria and a higher level of accountability the decision points put before for the management of water resources them will ensure that relevant and associated investment planning inter-governmental stakeholders and prioritization is essential. This who are taking action that impact will require the strengthening of the water resources are at the table authority mandated to make decisions and understand the importance of related to water allocation. implementing resource management actions. More effectively using the � The current institutional structure existing structures that facilitate is broadly appropriate, where the dialogue between the levels of Ministry of Water and Irrigation government and regularizing public that has the legal mandate for dialogue platforms should be used many of the core water resources to raise awareness and ensure that management tasks; Authority all stakeholders are involved in and for planning, monitoring and understand water management enforcement is devolved to the nine priorities and are prepared to Basin Water Boards, which are meant implement related actions. to be multi-sectoral bodies. The National Water Board, also meant to � Strengthening investment be multi-sectoral, has the authority to prioritization will also require take up water management issues of a higher-order harmonization national importance. Six of Tanzania’s of effort through budgetary nine basins has an integrated water allocations and multi-sectoral management and development planning, as well as a willingness to PAGE 50 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region face down difficult tradeoffs at the fail, enhanced capacity and political highest levels. While these tradeoffs traction for implementing enforcement will largely be driven by development measures is essential. policy, new analytical tools such as Freshwater Resilience by Design59 3 Information for Decision-making. can lay the groundwork for informed Decision-making bodies must have choices to ensure resource allocation the information required to make priorities align with development and transparently justify robust and priorities. balanced decisions regarding water resource allocation, water quality issues 2 Strongly Enforced Water Pricing and sectoral growth needs. Investing in Reflective of Scarcity Challenges. data collection methods that equip water Pricing bulk water appropriately aids management bodies to characterize the in covering operational expenses vast and remote portions of Tanzania of water management and source must be scaled up. Harnessing satellite protection and it provides an economic data and advanced technology is an incentive for more efficient use. A imperative that must be implemented strong awareness raising, compliance with full view of the ability of authorities and enforcement system is required to to operate, maintain and sustain use of complement the pricing structure to those advanced systems. In Tanzania, ensure that there are no free rides – basic surface-water hydrology and including no free rides for government water abstraction information is in place users and industries. In Tanzania, this for many locations, but bringing this is one of the more urgent and important information system to scale in a way water management needs – currently, that can inform actual decision making systems for valuing, permitting, is an urgent need. This will require more monitoring, and enforcement are weak. resources and expanded staff, but can The Basin Water Boards and Ministry benefit from advanced technology of Water and Irrigation officials have (already in pilot in Tanzania) where solar the de jure mandate for carrying these power and remotely transmitted data tasks out, but lack capacity and de facto can reduce staff-time requirements mandate to fully implement needed measures. Strengthening these bodies � Synthesizing information with as well as collaborative mechanisms and targeted end-users in view will awareness raising from the community ensure that stakeholders users level to the district and regional level all at multiple levels and sectors the way to cities, government agencies can inform their water-related and actors is key to smoothly ramping decisions. Tanzania’s plans to launch up pricing and enforcement measures. a center of excellence for water Where collaborative approaches resources decision making will go 59 Freshwater Resilience by Design is an approach that combines stakeholder engagement and collaborative objective setting with a multi-criteria optimization analysis to help decision makers prioritize infrastruc- ture, policy and operational actions while accounting for uncertainties in future climate and development changes. PAGE 51 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Box 5: Saving the Great Ruaha Requires Improved Water Management In many ways, the water resources situation in the Great Ruaha exemplifies many of the management challenges that are occurring throughout Tanzania. In this sub-basin of the Rufiji Basin, irrigated agriculture is situated upstream of the Ruaha National Park, which is in turn upstream of the Mtera-Kidatu hydropower cascade. These upstream regulated and unregulated irrigation schemes withdraw significant quantities of water – in fact, they withdraw so much water, that this perennial river no longer flows for more than 100 days during the annual dry season. The lack of water creates extreme stress for the wildlife in the park as it reduces food and shelter for many animals. Reducing the river to puddles in the dry season also increases the wildlife disease burden as animals are far more crowded than they are used to and increases human-wildlife conflict as the animals are forced to forage further and further from the river bed. The uncontrolled upstream water withdrawals also impact the hydroelectric power production in the basin, where hydropower plants are operated sub-optimally because of a lack of available water. The situation is broadly known in Tanzania and the government is taking serious steps toward addressing the overarching water management challenges. The four factors needed for making water work will also make water work in The Great Ruaha. Rufiji Basin Requires Enhanced Multi-Sectoral Coordination, Investment Prioritization and Information for Decision-making. Information on water usage and sectoral plans must be synthesized and shared with decision makers at all levels. Taking a hard look at future investment choices and coordination among all effected sectors is essential to reversing the damage in the Ruaha, as well as planning resources in the remainder of the Rufiji basin. Strongly Enforced Water Pricing Reflective of Scarcity and Drought in the Rufiji Basin. Valuing water for all uses, including environmental needs, is currently lacking in the Ruaha. The current system of “first-access” by upstream irrigators reduces the regional or national ability to allocate water to its highest socio-economic use. Enforcement of water permitting is also a gap that must be addressed, both to reverse damage in the Ruaha and to avoid similar situations across the country. Efficiency improvement in the use of water for agriculture is a priority, together with investments in drainage infrastructure to ensure water used for irrigation can return to the environment. Imposing a freeze in the use of any new agricultural land for irrigation until efficiency is increased and pricing methods are implemented is recommended. Clarity, Capacity and Resources to Carry out Institutional Mandates. The insufficient capacity in the Ministry of Water and Rufiji Basn Water Board hampers their ability to address the issues in the Ruaha basin. Enhanced de facto authority and capacity to increase coordination and awareness raising at the regional and district levels – both within the Ruaha sub-basin and in other sub-basins – are much needed to reduce over- extraction in the Great Ruaha River. PAGE 52 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region a long way toward addressing this Water management must be part of the gap. However, the new body must be country’s framework for assessing its properly staffed, resourced and have strengths and shortcomings as framed appropriate access to multi-sectoral in the Development Vision which data and stakeholder dialogue to was crafted based on an evaluation effectively close this gap. of “where we came from, where we are now, and where we want to go.”60 � At present, Tanzania’s groundwater Clean and adequate water supplies are resources and water quality has at the heart of making the economy and been understood only to have very society in Tanzania work. The alarming limited extent. Measures to address increases in scarcity and water pollution, this must be undertaken to ensure left unaddressed, will surely compromise a the appropriate management of this successful way forward. important resource. A closer look at gaps and opportunities is required to Getting to the future, Tanzania’s needs address this challenge. can be as simple as re-thinking the worth and value of water, strengthening its 4 Clarity, Capacity and Resources to institutional structures and putting the Carry out Institutional Mandates. right investments in place to manage it Given the cross-cutting nature of properly. A new appreciation for water must water, it is critical to ensure that acknowledge its finite nature and make water management and development sure every drop is accounted for and fairly mandates of relevant ministries allocated so that the needs of all sectors and governmental bodies are clear and the environment are considered. Doing and complimentary. Where overlap so will help Tanzania see the real power of exists or where close coordination water as an asset that can help the country is needed, such as in water source realize returns from investments made in protection, watershed management agriculture, energy, tourism, mining and and wastewater discharge permitting industry. and monitoring, intergovernmental structures are needed to ensure Tough decisions will shape water’s future coordinated action maximizes human in Tanzania. And government reforms are and financial resources. Capacity to needed to encourage this change, as well carry out water-management functions as better coordination among policy makers is required at all levels, including that can lead to smarter investments. In standard measures such as permitting, Tanzania, water is everyone’s business. monitoring, and enforcement measures. And everyone must play a role to ensure its With this increased clarity and capacity, viability and sustainability. decision-making in Tanzania will be more robust and informed, and will have more of a long-term lens that considers the needs of the many stakeholders. 60 The United Republic of Tanzania Planning Commission. 1999. The Tanzania Development Vision 2025. http://www.mof.go.tz/mofdocs/overarch/vision2025.htm. PAGE 53 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Box 6: WRM Institutions Demonstrating Multi-Sectoral Coordination: Mexico and Brazil Improved water resources management for sustainable development requires a well- established national institution with executive function that leads strong coordination, involves stakeholder participation and supports multi-level governance. Experiences from other countries can inspire how water resources management in Tanzania could be improved. Mexico - The National Water Commission, CONAGUA, is a federal institution created in 1989. The mandate of CONAGUA is to manage and preserve national waters to achieve sustainable use, with joint responsibility of the three tiers of government (federal, state, and municipal), thus requiring co-ordination initiatives. This is the highest institution in Mexico for water resource management, encompassing water policy, water rights and planning, and many other water related services. Its Technical Council is an inter-ministerial body in charge of evaluating and approving CONAGUA’s programs, projects, budget and operations, as well as coordinating water policies across departments and public administration agencies. The council is composed of the highest representatives from eight ministries and national institutes. Mexico’s water sector has undergone more than three decades of serious and far reaching reforms. Over the years, capacity has been built within CONAGUA to enable it to undertake information-based planning and decision-making. Brazil – The National Water Agency, ANA, is a federal agency under the Ministry of the Environment, as part of the national water resource management system. With administrative and financial autonomy, ANA is responsible for implementing the national water resources policies, granting and providing funds, regulating access to water, promoting its sustainable use and arbitrating conflicts among users. ANA acts as an executive-regulatory agency to manage water with three mechanisms: the granting of rights to the use of water resources, the commitment to inspections that ensure licenses are effectively respected, and the charging for water use. It plays management and coordination roles. Water sector reforms in Brazil started about two decades ago, leading to the establishment of ANA in 2000. The reform process fostered the development of water information, knowledge, and capacity that enables ANA to carry out strategic planning and sound decision making for water resources management. Being the authority to implement and co-ordinate the National Water Law, ANA Brazil has brought a general improvement of water resource management in Brazil. PAGE 54 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Annexes PAGE 55 TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Annex 1: Key Macroeconomic Indicators Indicator Unit 2010 2011 2012 2013 2014 2015 2016 Population (Mainland)/2 Millions 43.6 44.8 44.9 46.1 47.4 48.8 51.2 Per capita Income/2 US$ 726 765 870 969 1028.8 968.8 932.0 GDP Growth/2 % 6.4 7.9 5.1 7.3 7.0 7.0 7.0 Inflation/2 (period average) % 7.2 12.7 16.0 7.9 6.0 5.6 5.2 Exchange Rate/2 (period average) TZS/US$ 1,432.3 1,579.5 1,571.7 1,597.6 1658.1 2002.8 2179.1 External Sector Exports - Goods & Services (f.o.b)/2 Mil. US$ 6,370.0 7,398.2 8,675.6 8,459.8 8,726.8 8,921.9 9,381.6 Imports - Goods & Services (f.o.b)/2 Mil. US$ -9,054.4 -12,035.6 -12,678.0 -13,517.6 -13,583.2 -12,513.0 -10,797.4 Current Account Balance/2 Mil. US$ -2,684.4 -4,637.3 -4,002.4 -5,057.9 -4,856.4 -4,011.6 -2,054.8 Balance of Payments (Overall balance)/2 Mil. US$ 369.8 -202.0 326.2 495.7 -233.8 -199.1 305.5 Foreign Reserves/2 Mil. US$ 3,948.0 3,761.0 4,068.1 4,678.0 4,388.0 4,093.7 4,325.6 External Debt/2 (as a % of GDP) 28.0 26.3 27.0 29.0 29.0 30.0 29.0 Foreign Direct Investment/2 Mil. US$ 991.1 1,009.0 1,799.6 2,087.3 1,672.6 1,604.6 1,365.4 Monetary Sector Average Deposit Rate/2 % 9.1 7.3 9.6 11.4 8.3 8.3 10.8 Average Lending Rate/2 % 13.8 13.9 13.9 14.1 13.9 13.9 14.2 Growth in Money Supply (M3)/2 % 25.4 18.2 12.5 10.0 15.6 18.0 9.2 Government Finance Total Domestic Revenue/1 (as a % of GDP) 11.8 12.2 12.6 13.1 13.3 14.1 14.4 Tax Revenue/1 (as a % of GDP) 11.1 11.2 11.6 12.0 12.1 12.5 12.8 Non-Tax Revenue/1 (as a % of GDP) 0.6 0.9 1.0 1.0 1.1 1.3 1.5 Total Expenditure/1 (as a % of GDP) 20.0 19.1 19.1 18.8 18.0 19.2 18.3 Recurrent Expenditure/1 (as a % of GDP) 13.9 12.9 13.0 13.4 13.2 13.7 13.9 Development Expenditure/1 (as a % of GDP) 6.1 6.2 6.1 5.4 4.8 5.4 4.5 Grants/1 (as a % of GDP) 3.5 3.0 2.3 2.1 1.6 1.3 0.5 Fiscal Balance (after grants)/1 (as a % of GDP) -4.8 -4.0 -4.1 -3.6 -2.9 -3.6 -3.5 Note /1 Fiscal year is used, and it ends June 30th of the mentioned year /2 Calendar year is used, and it ends in mentioned year December 31st. Source: IMF and Tanzania Authorities (MoF, BoT, NBS). Annex 2: Annual Real GDP Growth Rates Economic Activity 2009 2010 2011 2012 2013 2014 2015 2016 Agriculture and Fishing 5.1 2.7 3.5 3.2 3.2 3.4 2.3 2.0 Crops 5.5 3.7 4.8 4.2 3.5 4.0 2.2 1.1 Livestock 5.3 1.4 1.6 1.8 2.0 2.2 2.4 2.6 Forestry and Hunting 5.1 3.4 3.3 3.5 4.7 5.1 2.6 4.5 Fishing 0.5 0.9 2.6 2.9 5.5 2.0 2.5 3.4 Industry and construction 3.3 9.1 12.0 4.0 9.5 10.3 11.3 10.7 Mining and quarrying 18.7 7.3 6.3 6.7 3.9 9.4 9.1 15.6 Manufacturing 4.7 8.9 6.9 4.1 6.5 6.8 6.5 7.0 Electricity 4.3 13.4 -4.3 3.3 13.0 9.3 5.8 8.3 Water 4.6 2.2 -1.2 2.8 2.7 3.7 0.1 5.5 Construction -3.8 10.3 22.9 3.2 14.6 14.1 16.8 6.7 Services 5.8 7.8 8.4 7.2 7.1 7.2 6.9 7.6 Wholesale and Retail Trade,Repairs 2.7 10.0 11.3 3.8 4.5 10.0 7.8 6.7 Transport and storage 6.9 10.7 4.4 4.2 12.2 12.5 7.9 11.8 Accomodation and Food Services 1.0 3.7 4.1 6.7 2.8 2.2 2.3 3.7 Information and communication 26.6 24.4 8.6 22.2 13.3 8.0 12.1 13.0 Financial and insurance activities 18.4 12.6 14.8 5.1 6.2 10.8 11.8 10.7 Real estate 1.8 1.8 1.9 2.0 2.1 2.2 2.2 2.4 Professional,scientific and technical activities 15.8 29.9 4.8 -5.8 5.4 0.5 6.8 6.3 Administrative and support service activities 0.4 8.6 5.1 23.8 12.2 6.0 4.7 2.1 Public administration and Defence -0.7 -5.0 15.9 9.1 7.8 3.9 4.6 6.7 Education 9.2 6.4 5.6 7.4 4.3 4.8 6.3 8.1 Human Health and social work activities 7.4 3.3 5.3 11.4 8.8 8.1 4.7 5.2 Arts, entertainment and recreation 3.0 7.3 7.7 11.0 5.7 5.7 6.2 8.8 PAGE 56 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Other social and personal services 5.9 6.0 6.2 6.4 6.5 6.7 6.9 7.2 Activities of households as employers 2.7 2.7 2.7 2.7 2.7 2.7 2.7 3.0 FISIM 20.0 7.9 22.6 1.2 0.1 9.7 11.7 16.3 Net taxes 12.8 3.8 12.1 0.4 14.2 7.7 9.6 7.8 Total GDP 5.4 6.4 7.9 5.1 7.3 7.0 7.0 7.0 Source: National Bureau of Statistics Annex 3: Shares of economic activity in GDP (current market prices) Economic Activity 2008 2009 2010 2011 2012 2013 2014 2015 2016 Electricity and water 1.7 1.6 1.5 1.0 1.3 1.2 1.6 1.4 1.3 Electricity 0.9 0.9 0.9 0.6 0.9 0.8 1.1 1.0 0.9 Water 0.8 0.7 0.6 0.5 0.4 0.5 0.5 0.4 0.4 Construction 8.8 7.2 7.8 9.0 8.1 10.8 12.4 13.6 14.0 Services 45.10 45.45 44.23 42.73 41.85 41.02 40.90 40.00 39.07 Wholesale and Retail Trade,Repairs 9.7 9.9 10.1 10.6 10.4 10.2 10.5 10.7 10.7 Transport and storage 6.0 6.2 5.8 5.2 4.4 4.2 4.3 4.3 4.3 Accomodation and Food Services 1.7 1.8 1.6 1.4 1.4 1.3 1.1 1.1 1.0 Information and communication 2.2 2.4 2.6 2.4 2.4 2.3 2.1 2.0 2.0 Financial and insurance activities 2.9 3.1 3.2 3.4 3.4 3.3 3.4 3.6 3.6 Real estate 5.2 5.1 4.6 4.3 4.3 3.8 3.7 3.2 3.0 Professional,scientific and technical 1.4 1.5 1.7 1.5 1.3 1.3 1.3 1.2 1.2 activities Administrative and support service 2.6 2.4 2.2 2.1 2.3 2.4 2.5 2.4 2.2 activities Public administration and Defence 7.0 6.7 6.1 6.3 6.5 7.0 6.6 6.4 6.3 Education 3.1 3.2 3.1 2.8 2.6 2.7 2.7 2.5 2.3 Human Health and social work activities 1.6 1.8 1.7 1.6 1.5 1.4 1.4 1.4 1.4 Arts, entertainment and recreation 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Other social and personal services 0.9 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.7 Activities of households as employers 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 FISIM -0.9 -0.9 -0.9 -1.1 -1.0 -1.2 -1.0 -1.1 -1.0 Net taxes 6.6 6.6 6.4 6.2 6.3 6.3 8.1 7.8 7.8 Total GDP 100.00 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: National Bureau of Statistics (NBS) PAGE 57 Annex 4: Quarterly Real GDP Growth Rates Ad- Profes- Ac- Infor- minis- 58 PAGE Trans- sional, All Mining com- mation Finan- Public trative Taxes Manu- Con- Trade port Scien- Other indust. GDP at Quar- Agri- and Elec- moda- and cial & admin- & Real Edu- on Year factur- Water struc- and and tific & Health ser- FISIM at market ter culture quar- tricity tion & com- insur- istra- Sup- estate cation prod- ing tion Repair stor- Tech- vices basic prices rying restau- muni- ance tion port ucts age nical prices rant cation ser- act. vices 1 3.2 6.2 11.4 7.3 -0.8 -2.2 7.8 3.0 11.8 20.8 6.8 -15.1 109.8 -16.9 1.8 6.1 4.3 5.4 -0.2 4.5 12.6 5.0 2 3.1 22.2 10.1 13.9 3.9 36.3 12.6 4.8 4.5 14.3 12.7 -24.4 98.1 -6.1 1.8 6.1 2.9 5.8 7.3 7.3 8.5 7.4 2010 3 1.6 0.5 8.7 18.8 3.2 10.3 7.7 4.0 12.6 16.6 14.7 2.0 26.9 -9.5 1.9 6.6 2.6 5.7 8.9 5.8 -3.3 5.1 4 2.6 3.0 5.9 13.3 2.4 3.3 11.9 3.0 13.6 46.2 15.9 17.7 -25.2 78.0 1.9 6.6 3.6 5.5 15.6 8.7 -0.7 8.0 1 3.1 10.6 6.0 4.6 -1.2 33.5 9.7 3.7 10.5 -0.7 20.1 27.7 -7.1 5.2 1.9 6.2 4.2 5.8 24.8 8.4 1.9 8.0 2 3.0 3.7 10.2 0.0 -2.3 21.3 12.6 4.6 9.0 11.1 18.1 51.7 5.2 19.7 1.9 6.2 4.3 6.1 25.3 10.1 12.1 10.3 2011 3 4.4 9.6 4.6 -14.4 -2.7 22.3 12.7 3.9 13.3 16.9 13.9 3.1 16.4 20.5 1.9 5.1 5.4 5.7 24.6 8.5 19.1 9.3 4 3.6 1.7 7.3 -5.8 1.2 17.0 10.2 4.4 -12.6 7.2 8.2 -4.6 5.9 -12.0 2.0 5.1 7.3 5.8 16.4 3.6 15.2 4.4 TA N Z A N I A E C O N O M I C U P D AT E 1 3.5 7.5 3.6 -6.3 2.6 7.5 9.2 4.3 4.3 34.6 5.7 10.6 1.0 36.9 2.0 5.7 9.9 6.0 5.6 7.0 6.6 7.0 2 3.4 7.8 3.6 -1.5 2.8 -6.9 3.8 3.8 4.2 21.5 2.9 0.4 2.5 24.2 2.0 5.7 12.1 5.9 0.7 3.8 -1.7 3.4 2012 3 3.0 4.3 3.7 12.5 5.6 3.7 1.4 9.7 -0.3 23.5 4.5 15.3 5.5 35.1 2.0 9.0 12.4 7.5 -1.5 6.3 -2.8 5.5 4 3.0 7.2 5.5 8.7 0.3 8.1 1.1 8.6 9.2 12.5 7.5 10.6 -31.9 4.3 2.0 9.0 11.0 7.2 0.5 5.0 0.3 4.7 1 3.6 -6.3 4.5 16.0 1.1 7.8 1.9 6.6 12.4 2.6 5.9 10.0 24.3 25.0 2.0 5.1 9.6 6.7 -3.1 6.0 18.1 6.8 2 2.8 3.4 6.0 14.2 0.9 13.0 4.3 3.6 -3.0 17.9 4.0 7.6 -8.0 23.5 2.1 5.1 8.9 6.0 -2.3 5.5 17.8 6.3 2013 3 1.9 3.3 10.4 10.3 -6.9 16.3 6.7 -0.4 19.3 8.4 6.8 3.8 -10.5 4.2 2.1 3.5 8.5 4.7 2.0 6.4 17.7 7.2 4 4.3 14.6 4.9 12.1 15.7 19.9 5.1 1.9 19.1 23.7 7.9 10.1 27.5 -0.2 2.1 3.5 8.4 5.3 3.4 9.1 4.2 8.7 1 3.6 19.7 8.2 17.5 0.7 21.4 10.6 3.4 14.7 17.1 11.2 -2.1 -0.3 12.7 2.1 5.4 8.4 6.1 9.4 8.3 2.4 7.8 2 4.4 6.4 10.1 -1.4 5.1 37.5 12.3 3.0 9.6 18.4 14.2 4.9 7.2 13.3 2.1 5.4 8.3 6.0 11.6 10.2 4.4 9.8 2014 3 4.0 5.2 6.3 13.2 12.7 -0.7 12.6 0.2 13.2 12.9 10.1 10.3 -10.6 -17.1 2.2 4.1 8.1 5.0 9.0 5.5 8.8 5.7 4 0.8 7.6 3.0 8.6 -2.3 5.2 4.6 2.5 11.7 -11.4 8.0 2.5 5.6 17.3 2.2 4.1 7.8 6.0 8.8 3.6 15.1 4.4 1 1.4 0.6 9.9 10.6 7.6 23.2 7.1 -1.0 14.5 12.8 11.5 -0.9 3.3 5.6 2.2 7.4 5.8 5.1 13.0 6.9 1.2 6.5 2 0.7 11.2 5.2 18.9 -3.9 13.2 10.0 1.0 9.4 11.8 10.1 0.2 11.9 8.3 2.2 7.4 4.9 5.7 4.1 6.2 10.2 6.5 2015 3 3.3 8.0 2.1 -1.1 0.1 17.6 5.3 6.2 6.7 13.4 12.9 4.2 4.1 4.4 2.2 5.3 4.3 7.1 7.4 6.4 11.6 6.8 4 5.3 15.7 9.5 -2.5 -2.7 13.8 8.7 2.6 1.4 10.2 12.7 14.4 7.3 0.5 2.3 5.3 3.8 6.1 21.9 7.6 14.8 8.2 NOVEMBER 2017, 10TH EDITION 1 2.7 6.5 7.4 4.4 -2.5 8.9 6.0 -1.3 7.9 13.3 13.5 23.5 6.0 -2.6 2.3 8.6 5.3 6.3 18.8 6.6 10.6 6.9 2016 2 2.6 13.4 9.1 5.0 4.3 11.1 4.7 2.5 30.6 11.6 12.4 17.7 5.9 3.2 2.4 8.6 5.7 6.4 28.0 8.2 12.0 8.5 3 1.9 10.4 4.5 9.5 14.5 20.6 6.1 5.5 10.2 13.8 7.4 -1.8 4.4 8.3 2.4 7.5 5.4 6.9 19.8 6.8 8.5 7.0 4 0.9 14.8 10.2 15.3 0.6 12.0 9.9 7.6 2.3 13.3 9.7 -7.7 8.9 1.5 2.4 7.5 4.5 7.7 1.8 5.9 1.2 5.6 1 2.6 35.3 7.8 4.4 2.0 8.4 6.8 3.0 4.1 13.8 8.1 -4.2 1.9 1.1 2.3 5.2 6.4 6.4 -1.8 5.8 4.5 5.7 2017 2 3.7 18.0 9.3 0.2 7.0 8.8 5.4 3.7 19.8 12.3 8.2 -3.4 5.4 5.0 2.3 5.2 8.4 7.0 -5.2 7.1 17.0 7.8 Source: National Bureau of Statistics The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Annex 5: Fiscal framework (Percent of GDP) 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2016/17 2017/18 Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Actual Budget Total domestic revenue 12.2 12.7 13.8 12.9 15.6 13.8 13.3 13.0 14.5 14.4 15.8 15.3 16.5 Total expenditure 22.2 18.9 20.9 20.6 22.7 18.9 18.6 17.3 18.7 18.3 21.8 18.4 21.2 Overall deficit before grants -10.0 -6.2 -7.1 -7.8 -7.0 -5.1 5.3 -4.3 -4.2 -4.0 -5.9 -3.1 -4.6 Grants 4.8 3.3 3.1 2.6 3.2 2.2 1.3 1.2 1.0 0.5 1.3 0.9 0.8 Overall deficit after grants -5.2 -3.6 -4.0 -5.0 -3.8 -3.4 4.0 -3.3 -3.3 -3.5 -4.6 -2.2 -3.8 Overall primary balance -5.2 -3.6 -4.0 -5.0 -3.8 -3.4 4.0 -3.3 -3.3 -3.5 -4.6 -1.7 -3.8 Financing 5.2 3.6 4.0 5.0 3.8 3.4 4.3 3.1 -3.3 -3.5 -4.6 1.7 3.8 Foreign (net) 4.2 3.0 5.5 3.9 3.8 3.1 4.3 3.1 1.9 1.5 3.7 1.8 2.8 Domestic (net) 0.7 0.6 -1.4 1.1 0.0 0.3 -0.3 0.2 1.3 2.1 0.9 -0.1 1.0 Source: Ministry of Finance and Planning Annex 6: Balance of Payments (Percent of GDP, except where noted otherwise) 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 1. CA balance (including transfers) -8.4 -8.5 -16.6 -9.6 -11.2 -10.0 -8.0 -4.6 Exports of Goods 15.3 18.7 21.2 15.1 11.8 10.8 11.6 11.9 o/w Gold 5.7 6.6 9.2 5.4 3.7 2.7 2.6 3.0 Import of Goods -27.0 -31.0 -40.8 -26.4 -24.8 -22.6 -21.5 -17.8 Services ( net) 0.6 0.7 0.4 1.1 1.6 1.5 1.6 2.9 Trade balance -11.1 -11.6 -19.2 -10.2 -11.4 -10.4 -8.3 -3.0 Income ( net) -1.4 -1.4 -1.1 -1.5 -1.6 -0.7 -0.8 -2.3 Current transfers ( net) 4.1 4.5 3.7 2.1 1.7 1.0 1.0 0.8 2. Capital and financial account 11.2 15.6 16.7 11.9 12.8 7.9 7.3 5.5 Capital account 2.0 2.3 2.5 2.0 1.5 1.1 0.8 0.9 Financial account 9.2 13.3 14.2 9.9 11.3 6.8 6.5 4.7 o/w Direct investment 4.4 7.8 5.1 4.6 4.7 3.0 3.6 2.9 3. Net errors and omission -1.2 -5.5 -1.0 -1.5 -0.4 1.6 0.3 -0.3 4. Overall balance 1.7 1.6 -0.8 0.8 1.1 -0.5 -0.4 0.6 5. Reserves and related items -1.7 -1.6 0.8 0.8 1.1 -0.5 -0.4 0.6 Reserves assets -3.1 -1.7 0.9 0.8 1.4 -0.6 -0.6 0.5 Use of Fund credit and loans 1.4 0.1 0.0 0.0 -0.3 0.1 0.2 0.2 Memo items Gross international reserves ( Mil USD) 3,552.5 3,948.0 3,744.6 4,068.1 4,689.7 4,377.2 4,093.7 4,325.6 In months of imports (current year) 5.6 5.2 3.7 3.8 4.1 4.7 5.1 5.3 Source: Bank of Tanzania, IMF and World Bank PAGE 59 60 PAGE Annex 7: Monthly Imports of Goods and Services (Million US$) 2015 2016 2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total Imports of Goods and 1106 1081 1136 979 1019 1217 1229 1040 970 1004 852 880 980 889 895 894 903 1059 817 926 893 848 845 825 749 717 738 672 756 705 Services Imports of goods 874 858 918 789 813 987 976 786 751 778 644 670 776 705 696 713 739 856 664 767 710 671 688 649 600 566 580 526 599 545 (f.o.b.) TA N Z A N I A E C O N O M I C U P D AT E Capital goods 361 381 357 352 346 313 325 297 289 315 239 238 254 230 219 218 214 231 224 267 259 241 245 248 229 225 243 208 222 210 Transport 105 98 108 90 102 106 108 78 71 106 67 57 71 56 65 65 60 61 50 78 87 48 70 87 53 41 44 41 72 51 equipment Building and 96 81 91 71 67 62 67 78 76 75 75 69 60 52 44 52 53 45 56 64 61 51 55 49 51 44 62 48 41 43 construction Machinery 159 203 159 190 176 145 150 141 143 135 97 112 123 121 110 101 101 125 117 125 111 142 119 112 125 141 137 118 109 116 Intermediate 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 196 goods Oil imports 212 270 281 172 211 323 290 261 191 204 164 183 248 246 244 243 247 282 170 201 195 187 184 177 139 145 120 101 85 95 Fertilizers 6 2 1 6 9 9 37 11 25 19 11 8 14 12 4 10 3 12 11 14 3 11 15 11 7 13 7 5 9 19 Industrial raw 73 66 65 53 49 129 70 46 61 61 54 63 85 69 77 83 89 117 65 76 89 69 57 61 50 56 45 45 63 62 materials NOVEMBER 2017, 10TH EDITION Consumer goods 223 138 214 205 199 213 252 171 185 178 177 178 175 149 151 158 186 213 194 208 164 164 187 152 175 126 164 168 219 158 Food and 63 34 72 62 64 54 20 40 38 31 37 27 42 22 34 32 45 67 42 41 33 27 40 20 40 26 39 42 63 46 foodstuffs All other 160 105 142 144 135 158 233 132 147 147 140 151 133 127 118 126 142 146 152 167 131 137 147 133 135 101 125 127 156 113 consumer goods Imports of 232 223 218 190 206 230 254 254 219 226 208 210 204 184 199 182 164 203 153 159 182 177 157 176 149 151 158 146 157 161 services Transportation 97 95 97 84 94 107 107 88 83 84 68 73 81 72 70 85 73 82 74 83 84 79 81 78 63 65 65 60 66 52 Passenger 13 13 9 8 16 10 14 14 12 10 7 8 6 6 7 5 6 5 6 5 10 10 11 11 10 10 9 9 8 10 Freight 84 82 88 76 78 95 94 73 70 73 60 64 74 66 62 79 67 78 68 78 73 69 70 67 53 54 56 50 57 42 Other 0 0 0 0 0 2 0 0 1 1 1 0 1 0 1 0 1 0 0 0 2 0 0 0 0 0 0 0 0 1 Travel 99 99 86 80 79 93 117 134 100 106 102 100 95 85 78 70 65 74 56 53 68 67 53 69 61 54 69 58 58 62 Communications 4 2 3 5 5 3 4 6 6 4 6 6 4 3 4 3 3 2 2 3 5 2 1 2 1 2 1 1 1 1 services Construction 4 0 0 0 0 2 0 0 2 2 2 1 1 2 2 2 1 1 2 2 3 2 2 2 2 4 2 3 2 3 services Insurance 4 3 3 3 3 3 6 5 5 6 5 4 1 1 2 2 1 2 2 1 1 3 3 4 2 3 3 3 3 7 services Financial services 1 0 0 1 0 0 1 0 1 1 1 0 0 1 1 1 1 0 0 0 1 1 1 2 1 1 1 1 1 1 Computer and information 2 3 2 0 1 1 1 1 1 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 services Royalties and 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 1 1 0 0 1 license fees Other business 14 16 20 11 17 14 12 14 16 17 18 21 16 12 37 17 15 33 12 13 11 15 12 13 13 14 13 14 20 27 services Personal, cultural, and 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 recreational services Government 7 4 6 5 6 6 5 6 6 7 4 5 5 7 5 2 5 8 3 3 8 5 3 5 3 5 2 4 5 6 services, n.i.e. Source: Bank of Tanzania and IMF The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region 61 PAGE TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Annex 8 Monthly Exports of Goods and Services (Million US$) 2015 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Manufactured goods 110 163 95 57 74 128 85 142 82 148 153 127 Cotton Yarn 0 1 0 1 1 1 1 1 0 2 2 1 Manufactured Coffee 0 0 0 0 0 0 0 0 0 0 0 0 Manufactured Tobacco 2 2 2 1 3 3 3 3 2 4 4 3 Sisal Products 1 3 1 3 1 2 1 1 1 1 1 1 Other manufactured goods 106 157 92 51 69 122 79 137 78 141 146 122 Fish and Fish Products 17 16 18 13 15 14 16 11 12 19 11 10 Horticultural Products 2 3 2 2 2 2 2 2 1 2 2 2 Other Export Products 46 35 58 48 116 90 62 84 107 43 109 86 Re-Exports 28 45 30 51 31 37 25 20 26 26 35 33 Services receipts 305 285 265 244 264 273 287 379 304 276 307 328 Transportation 82 85 84 82 80 77 89 86 88 81 90 88 Passenger 3 2 1 1 1 0 3 1 1 1 3 2 Freight 59 62 61 59 58 56 67 65 66 61 64 65 Other 20 22 22 22 22 21 19 20 21 18 24 21 Travel 174 157 137 119 144 159 162 252 178 148 171 204 Communications services 4 4 6 5 4 3 5 6 5 7 5 5 Construction services 0 0 0 0 0 0 0 0 0 0 0 0 Insurance services 4 3 4 4 4 4 4 4 3 2 4 3 Financial services 1 1 1 1 1 2 1 2 1 2 1 1 Computer and information services 1 0 0 0 0 1 0 0 1 1 0 0 Royalties and license fees 0 0 0 0 0 0 0 0 0 0 0 0 Other business services 35 31 29 29 27 24 24 24 24 29 30 24 Personal, cultural, and recreational 1 1 1 1 0 1 0 1 0 1 0 0 services Government services, n.i.e. 3 2 3 3 4 4 1 4 3 4 5 2 Re-Exports 28 45 30 51 31 37 25 20 26 26 35 33 Services receipts 305 285 265 244 264 273 287 379 304 276 307 328 Transportation 82 85 84 82 80 77 89 86 88 81 90 88 Passenger 3 2 1 1 1 0 3 1 1 1 3 2 Freight 59 62 61 59 58 56 67 65 66 61 64 65 Other 20 22 22 22 22 21 19 20 21 18 24 21 Travel 174 157 137 119 144 159 162 252 178 148 171 204 Communications services 4 4 6 5 4 3 5 6 5 7 5 5 Construction services 0 0 0 0 0 0 0 0 0 0 0 0 Insurance services 4 3 4 4 4 4 4 4 3 2 4 3 Financial services 1 1 1 1 1 2 1 2 1 2 1 1 Computer and information services 1 0 0 0 0 1 0 0 1 1 0 0 Royalties and license fees 0 0 0 0 0 0 0 0 0 0 0 0 Other business services 35 31 29 29 27 24 24 24 24 29 30 24 Personal, cultural, and recreational 1 1 1 1 0 1 0 1 0 1 0 0 services Government services, n.i.e. 3 2 3 3 4 4 1 4 3 4 5 2 Source: Bank of Tanzania and IMF PAGE 62 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region 2016 2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 66 162 184 142 97 75 71 61 55 64 56 58 45 96 59 61 80 65 0 0 2 1 1 0 1 1 1 0 1 2 3 7 0 7 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 3 3 4 3 3 3 3 2 0 0 0 0 0 0 0 0 0 1 2 3 2 2 2 2 2 2 2 3 3 3 2 3 1 3 3 64 156 176 136 92 70 65 55 50 62 53 54 40 88 55 52 77 62 12 15 16 13 15 13 9 13 9 7 10 10 20 14 13 13 20 19 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 2 58 99 93 106 94 108 69 79 113 72 62 21 66 55 22 62 54 152 83 31 56 44 15 25 16 10 10 9 9 173 34 23 11 12 13 41 302 293 291 260 248 283 279 400 336 351 332 351 277 267 291 256 265 281 78 79 78 79 75 93 82 103 99 98 96 94 87 90 92 91 89 85 1 1 1 2 1 2 2 3 3 3 4 4 4 3 4 3 1 2 56 58 56 56 56 71 59 80 76 75 74 80 73 77 79 78 78 73 21 20 21 21 18 20 21 20 20 20 19 10 10 10 10 10 10 10 190 181 172 142 136 156 164 260 201 222 201 224 155 139 136 135 134 158 5 4 5 5 3 2 2 3 3 2 2 2 2 1 2 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 2 6 4 3 3 4 4 4 4 4 4 3 3 3 2 3 3 3 2 3 2 3 1 1 1 1 0 2 2 3 3 2 2 3 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 23 22 26 25 28 27 25 27 24 22 24 24 27 29 52 22 31 30 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2 3 1 2 1 2 4 2 2 2 1 1 3 1 3 1 83 31 56 44 15 25 16 10 10 9 9 173 34 23 11 12 13 41 302 293 291 260 248 283 279 400 336 351 332 351 277 267 291 256 265 281 78 79 78 79 75 93 82 103 99 98 96 94 87 90 92 91 89 85 1 1 1 2 1 2 2 3 3 3 4 4 4 3 4 3 1 2 56 58 56 56 56 71 59 80 76 75 74 80 73 77 79 78 78 73 21 20 21 21 18 20 21 20 20 20 19 10 10 10 10 10 10 10 190 181 172 142 136 156 164 260 201 222 201 224 155 139 136 135 134 158 5 4 5 5 3 2 2 3 3 2 2 2 2 1 2 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3 2 6 4 3 3 4 4 4 4 4 4 3 3 3 2 3 3 3 2 3 2 3 1 1 1 1 0 2 2 3 3 2 2 3 2 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 23 22 26 25 28 27 25 27 24 22 24 24 27 29 52 22 31 30 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 2 3 1 2 1 2 4 2 2 2 1 1 3 1 3 1 PAGE 63 Annex 9: Inflation Rates 64 PAGE Furnishing, Food & Non Housing Alcoholic Housing, Equipment Miscel. Headline Beverages (Exclude Water, & Routine Clothing Goods Alcoholic Communi- Overall Food consumed at Electricity, Gas Maintenance of & Restaurants and and cation & Recreation Month Index Restaurants) Transport & Other Fuel House Footwear and Hotels Services Tobacco Entertainment Education & Culture Health Jan 2015 4.0 4.9 0.0 4.9 1.5 3.1 3.6 5.3 5.4 0.5 1.2 0.6 4.7 Feb 2015 4.2 4.9 -1.4 6.6 1.5 3.4 5.2 5.2 5.4 0.7 2.2 0.7 4.4 Mar 2015 4.3 5.9 -2.4 3.6 1.0 3.7 5.1 4.8 5.4 0.6 2.2 0.3 3.2 Apr 2015 4.5 7.1 -2.3 0.6 0.3 3.6 5.3 1.6 5.3 0.6 3.3 0.3 2.1 May 2015 5.3 8.5 5.0 2.0 0.9 4.1 4.8 1.4 5.2 0.9 3.5 0.9 2.3 Jun 2015 6.1 10.1 -1.3 1.0 0.9 4.5 4.3 1.1 5.9 -0.1 3.3 1.5 1.9 Jul 2015 6.4 10.6 -0.5 0.2 1.6 4.5 5.6 1.6 3.4 -0.2 3.3 1.3 2.8 Aug 2015 6.4 10.2 0.9 0.2 1.9 5.3 5.2 1.8 2.6 -0.4 3.3 1.5 3.0 Sep 2015 6.1 9.6 0.7 1.3 2.2 4.6 3.7 2.5 2.0 0.0 3.3 3.3 2.4 TA N Z A N I A E C O N O M I C U P D AT E Oct 2015 6.3 10.2 -0.1 1.3 2.0 4.5 3.9 3.0 1.2 0.2 3.3 3.3 2.9 Nov 2015 6.6 11.2 -0.2 -1.7 2.4 4.5 4.4 3.3 1.1 0.2 3.3 3.2 3.3 Dec 2015 6.8 11.1 1.0 -0.3 3.0 4.1 3.9 3.4 1.2 0.4 3.3 3.2 4.0 Jan 2016 6.5 10.7 1.3 1.1 3.5 4.8 4.3 4.0 1.7 0.5 3.4 3.6 4.4 Feb 2016 5.6 9.5 2.0 0.8 3.1 4.5 2.8 3.9 1.8 0.4 3.6 3.3 6.0 Mar 2016 5.4 8.3 2.6 5.5 3.8 4.2 2.8 3.6 2.1 -1.0 2.6 4.1 6.2 Apr 2016 5.1 7.1 2.0 7.0 4.9 4.3 4.8 3.9 4.1 -1.0 2.6 4.1 6.4 May 2016 5.2 7.0 1.6 8.8 4.4 4.5 4.9 3.9 4.9 -0.6 2.7 3.9 6.6 Jun 2016 5.5 8.1 1.3 7.6 4.2 4.6 5.3 3.7 4.9 -0.6 2.7 3.4 6.8 Jul 2016 5.1 7.6 0.4 7.4 3.4 4.2 4.3 4.0 5.5 -0.4 2.8 3.3 6.0 Aug 2016 4.9 6.9 -0.4 6.8 3.6 3.7 5.2 3.9 5.2 -0.2 3.0 3.5 5.9 Sep 2016 4.5 6.0 -0.8 6.5 3.5 4.2 5.2 3.3 5.3 -0.4 2.9 1.2 6.0 Oct 2016 4.5 6.0 0.1 7.2 3.6 3.8 4.3 3.2 5.3 -0.7 2.9 1.5 5.8 Nov 2016 4.8 6.2 0.7 10.9 4.3 3.9 4.4 3.1 5.6 -0.6 2.9 1.8 5.5 Dec 2016 5.0 7.0 0.3 9.9 4.0 3.7 4.2 2.9 5.1 -0.9 2.6 1.8 4.7 Jan 2017 5.2 7.6 0.6 9.5 3.3 3.4 3.9 2.3 5.0 -0.9 1.8 0.7 4.8 Feb 2017 5.5 8.7 0.6 8.7 3.8 3.2 3.9 1.9 5.2 -1.5 0.8 1.4 3.3 Mar 2017 6.4 11.0 1.6 6.8 3.9 3.4 3.6 3.6 5.2 -0.1 0.8 1.2 3.0 Apr 2017 6.4 11.8 1.9 5.8 3.1 3.9 0.8 4.3 3.5 -0.5 0.8 1.3 2.5 NOVEMBER 2017, 10TH EDITION May 2017 6.1 11.6 1.3 4.6 3.2 3.7 0.9 4.0 3.0 -0.8 0.7 1.2 2.9 Jun 2017 5.4 9.6 0.4 7.1 3.2 3.8 0.7 3.7 3.0 -1.0 0.8 0.8 2.2 Jul 2017 5.2 8.9 0.1 7.1 3.3 3.8 0.8 4.0 2.4 -1.0 0.9 1.0 2.4 Aug 2017 5.0 8.6 -0.6 8.9 2.7 3.4 -0.3 3.7 2.5 -1.1 0.8 1.3 2.0 Sep 2017 5.3 9.3 -0.3 8.8 2.6 3.4 -0.3 3.4 2.5 -1.0 0.8 1.9 1.9 Source: National Bureau of Statistics Annex 10: Food Crops Prices (Regional Averages, TZS per 100Kg.) Maize Rice Wheat Beans Sorghum Month Dar es Dar es Dar es Dar es Dar es Arusha Mbeya Arusha Mbeya Arusha Mbeya Arusha Mbeya Arusha Mbeya Year Salaam Salaam Salaam Salaam Salaam Jan 2014 50,250 54,792 44,625 130,000 143,958 114,167 80,688 108,750 105,000 132,625 156,458 132,708 62,333 69,167 - Feb 2014 50,773 53,864 45,364 127,727 128,182 114,318 79,318 109,091 107,000 139,545 157,727 135,000 60,773 70,364 - Mar 2014 49,750 57,750 47,458 130,000 148,042 128,750 78,667 98,542 110,000 146,875 167,708 135,000 56,417 70,364 - Apr 2014 50,400 56,000 41,850 130,000 143,625 139,000 77,900 115,625 113,500 136,500 164,250 135,100 57,000 72,375 - May 2014 53,654 57,789 39,923 133,846 146,931 139,038 82,500 130,673 115,000 144,615 171,298 134,654 59,462 72,572 - Jun 2014 49,192 54,692 44,077 129,231 134,923 121,731 81,423 129,808 111,923 132,500 174,872 132,500 54,808 73,395 - Jul 2014 45,227 49,700 40,364 135,000 131,492 117,591 77,318 123,045 106,591 127,955 157,007 125,000 52,227 68,583 - Aug 2014 40,458 42,398 34,958 127,083 123,750 107,292 73,375 121,389 97,500 127,917 146,250 115,000 52,500 66,181 - Sep 2014 38,577 34,212 36,615 128,846 123,173 104,423 75,577 120,193 102,308 137,885 159,423 116,538 54,346 66,539 - Oct 2014 36,250 35,107 39,714 131,071 131,126 116,786 78,036 118,956 111,429 136,786 165,119 118,571 54,893 66,742 Nov 2014 35,125 37,334 34,375 140,000 145,729 128,750 76,792 121,875 112,500 152,083 168,646 123,125 50,667 66,771 Dec 2014 35,712 39,452 33,538 143,846 151,538 134,731 76,923 122,116 115,000 149,423 165,866 123,462 46,808 59,308 - Jan 2015 36,521 36,136 32,727 150,625 155,682 126,818 77,500 130,000 115,000 162,083 167,500 127,273 53,792 57,273 - Feb 2015 35,500 37,444 32,625 150,000 162,778 139,375 77,000 146,111 115,000 161,250 178,333 161,250 49,250 58,889 - Mar 2015 40,167 41,850 32,000 156,250 179,500 143,333 83,833 140,750 115,000 151,458 181,250 122,500 47,958 59,500 - Apr 2015 52,909 52,636 39,955 159,455 180,909 154,182 83,955 122,727 115,000 157,955 174,818 122,500 50,955 64,545 - May 2015 52,563 51,333 44,667 175,000 178,333 141,667 78,875 120,417 117,083 171,875 188,333 122,500 53,750 68,958 - Jun 2015 55,083 53,813 44,667 171,667 170,000 139,833 78,833 110,000 127,500 174,167 205,625 122,500 55,333 80,000 - Jul 2015 58,964 58,730 42,238 169,345 175,411 134,792 77,500 120,833 101,539 138,897 175,411 117,024 59,940 76,486 - Aug 2015 71,455 59,115 46,676 159,470 166,563 136,167 77,848 117,090 97,611 130,540 175,000 113,259 69,500 75,146 - Sep 2015 67,402 58,872 49,667 162,803 162,969 133,954 77,273 113,250 98,796 136,800 171,042 127,500 75,515 67,663 - Oct 2015 60,883 62,457 51,100 170,333 170,313 149,200 77,389 111,200 97,500 145,063 164,563 133,500 78,944 80,825 - Nov 2015 66,731 67,325 57,208 182,212 183,194 151,125 77,500 118,120 102,500 170,128 186,768 142,500 80,000 73,029 - Dec 2015 69,600 65,027 61,091 174,000 190,581 161,909 77,861 121,364 104,773 161,000 194,773 142,500 78,500 76,742 - Jan 2016 70,515 64,942 68,000 158,859 193,322 162,500 83,364 129,195 116,818 168,208 201,097 143,182 83,542 88,276 - Feb 2016 66,269 66,122 64,455 183,942 194,093 162,500 78,917 134,880 122,273 145,756 194,802 145,000 71,109 106,756 - Mar 2016 59,908 64,428 60,400 185,250 191,493 171,000 75,967 124,484 125,000 131,617 183,556 157,000 74,733 109,673 - Apr 2016 54,612 63,417 53,875 168,846 187,139 163,333 73,000 120,833 131,875 124,833 177,618 152,500 68,038 117,167 - May 2016 47,955 58,881 53,400 161,515 173,144 154,250 88,894 109,630 119,500 131,970 176,486 137,500 63,773 111,074 - Jun 2016 50,972 59,974 50,923 158,194 162,884 136,346 77,806 115,019 110,385 122,472 177,866 135,192 68,042 99,103 80,000 Jul 2016 52,188 60,000 48,708 163,146 164,730 135,375 77,667 119,286 113,750 133,035 178,585 135,000 62,542 99,405 - Aug 2016 49,625 58,840 49,038 164,167 163,770 138,846 75,104 117,708 110,000 137,660 185,470 135,000 55,389 95,833 - Sep 2016 51,514 59,702 49,833 160,451 161,635 136,250 74,986 116,667 114,792 151,354 179,110 135,000 71,264 96,167 - Oct 2016 59,674 65,310 53,364 159,410 163,929 140,000 77,625 119,643 116,818 153,299 188,095 135,000 69,208 102,500 - Nov 2016 67,389 74,566 59,583 162,708 162,866 140,000 77,764 114,848 117,500 152,882 188,923 135,000 65,215 101,852 - Dec 2016 77,381 92,193 62,800 156,845 163,115 140,000 77,500 115,167 118,500 155,952 188,079 136,400 65,262 99,071 - Jan 2017 97,833 98,298 79,031 165,000 172,443 146,500 76,667 117,413 116,241 176,875 194,732 140,583 73,500 106,424 - Feb 2017 118,286 104,402 95,263 173,155 181,770 153,000 75,834 119,660 113,981 197,798 201,385 144,767 81,738 113,777 - Mar 2017 99,136 107,325 90,769 162,955 188,293 174,885 80,200 124,741 118,800 186,250 207,774 162,692 81,750 125,833 - Apr 2017 117,500 124,854 84,542 195,000 185,868 179,375 77,500 136,111 117,188 213,333 209,826 156,800 87,500 142,458 - May 2017 93,833 103,190 81,556 182,000 191,025 178,889 78,500 138,182 118,958 165,500 203,121 155,000 78,083 137,587 - The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Jun 2017 89,125 82,530 75,583 178,269 183,198 170,000 76,458 126,573 107,179 168,056 200,042 154,042 78,250 139,042 - Jul 2017 62,500 73,429 72,214 188,333 183,750 174,286 72,167 118,643 105,833 158,333 205,357 155,286 74,167 122,500 - Aug 2017 52,286 52,880 66,313 183,571 177,220 157,100 64,500 124,065 98,611 162,500 197,494 154,444 66,333 98,042 - Sep 2017 54,100 53,491 64,000 180,111 182,180 181,375 68,450 129,583 133,333 161,071 200,835 181,464 57,389 98,393 - 65 PAGE Source: Ministry of Industry, Trade, and Marketing Annex 11: Interest Rates Structure (Percent) Item 2015 2016 2017 (Percent) 66 PAGE Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul A: Domestic Currency 1. Interbank Cash Market Rates Overnight 10.1 6.9 6.4 9.7 6.1 18.0 30.0 9.8 6.3 12.3 10.5 7.1 11.9 13.3 10.1 11.1 12.3 12.8 14.4 16.3 16.2 15.5 13.2 13.7 10.1 7.9 7.4 7.2 6.8 4.1 4.4 2 to 7 days 10.7 7.6 6.4 8.9 7.1 21.1 29.4 9.8 7.3 12.8 12.1 14.4 12.5 13.4 11.1 11.6 12.6 13.2 14.6 16.5 16.5 15.9 13.5 13.2 11.7 9.3 8.7 7.0 7.5 5.7 5.1 8 to 14 days 9.8 5.4 7.7 9.4 7.9 23.3 33.6 14.7 9.1 9.1 12.4 12.4 15.0 13.7 11.1 6.8 12.5 12.6 15.0 16.7 16.5 15.0 13.5 13.6 10.6 9.3 10.6 10.1 7.0 5.6 5.8 15 to 30 days 14.5 8.1 4.3 10.3 10.3 30.0 18.5 18.5 18.5 18.5 18.5 18.5 12.2 18.0 11.5 11.5 11.5 10.5 13.0 14.6 14.5 16.3 16.3 13.0 12.0 9.8 10.0 11.0 9.8 6.1 6.2 31 to 60 days 10.0 9.5 9.5 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 16.0 16.0 16.0 16.5 16.5 12.9 12.5 12.5 12.5 9.0 9.0 9.0 9.0 61 to 90 days 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 14.6 14.6 14.6 15.8 16.8 16.8 16.8 16.8 91 to 180 days 14.0 25.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 TA N Z A N I A E C O N O M I C U P D AT E 181 and above 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 12.9 Overall Interbank 10.3 7.1 6.4 9.5 6.4 18.7 29.7 9.8 6.6 12.4 10.7 7.3 12.0 13.3 10.4 11.2 12.3 12.8 14.5 16.4 16.2 15.6 13.4 13.5 10.5 8.7 8.2 7.4 7.2 4.9 4.9 cash market rate 2. Lombard 12.2 9.0 7.7 11.7 9.1 27.0 45.0 17.7 10.6 18.5 15.7 11.1 17.8 19.9 15.2 16.6 18.4 19.1 21.6 24.5 24.2 23.3 19.9 20.5 15.1 11.9 11.1 10.8 10.2 8.0 7.2 Rate 3. REPO Rate 4.2 4.2 4.2 6.0 6.0 6.0 22.4 11.8 6.1 6.1 6.3 5.4 5.4 5.4 5.4 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 5.1 6.9 6.9 6.9 3.8 2.9 2.2 2.2 4.Treasury Bills Rates 35 days 8.1 7.5 2.7 2.4 2.6 5.5 6.3 6.8 7.1 7.4 7.4 7.4 7.4 7.4 7.4 7.3 7.4 7.3 7.4 7.3 7.3 7.3 7.0 6.8 6.8 6.5 6.5 6.8 6.5 5.4 4.8 91 days 13.9 9.9 7.1 6.9 7.3 7.4 8.0 8.1 8.3 9.5 10.0 9.3 9.0 8.8 8.6 8.2 8.0 7.3 7.6 7.5 7.5 7.5 7.3 7.1 7.1 7.1 7.2 7.1 6.8 5.5 4.9 182 days 14.4 12.4 9.1 9.8 10.7 11.5 12.9 13.6 13.8 14.8 16.5 17.2 17.7 17.8 17.1 15.8 14.9 15.1 15.7 15.7 15.5 15.5 14.9 14.5 14.5 14.3 13.8 13.0 10.0 7.1 8.5 364 days 14.6 12.7 10.0 10.3 11.4 12.8 13.9 14.5 14.5 15.5 18.3 18.7 18.8 19.0 17.8 16.6 15.5 15.4 15.9 15.9 15.9 16.2 15.9 15.8 15.8 15.5 15.1 14.0 11.0 8.7 9.8 Overall Treasury bills 14.4 12.5 9.0 9.1 10.6 10.0 11.2 13.8 13.9 14.4 17.8 18.3 18.6 18.5 17.4 16.2 15.1 15.0 15.8 15.8 15.7 15.7 15.3 15.1 15.3 15.0 14.5 13.5 10.4 7.6 9.1 rate 5.Treasury Bonds Rates 2-years 15.3 15.3 12.3 12.3 14.0 14.0 14.0 15.0 15.0 16.8 16.8 16.8 17.3 17.3 17.5 17.5 17.3 17.3 17.3 17.4 17.4 17.7 17.7 17.7 17.7 17.7 17.6 17.6 16.2 16.2 12.5 5-years 16.0 15.3 15.3 11.4 11.4 11.4 16.5 16.5 16.9 16.9 16.9 17.5 17.5 18.8 18.8 17.1 17.1 17.1 17.8 17.8 17.9 17.9 18.0 18.0 18.0 17.7 17.7 17.9 17.9 17.9 13.1 NOVEMBER 2017, 10TH EDITION 7-years 16.3 16.3 16.3 15.6 15.6 16.6 16.6 16.6 16.9 16.9 17.6 17.6 16.2 16.2 18.2 18.2 18.2 17.5 17.5 17.9 17.9 17.9 18.3 18.3 18.4 18.4 18.4 18.4 16.5 16.5 16.5 10-years 16.5 16.9 16.9 16.7 16.7 17.0 17.0 17.0 17.6 17.6 18.1 17.6 17.6 18.8 18.8 18.9 18.9 18.0 18.0 18.0 17.6 17.6 17.6 17.6 18.6 18.6 18.6 18.6 18.6 14.8 14.8 15-years 17.9 17.9 17.5 17.5 17.5 17.5 17.5 17.5 18.0 18.0 18.0 18.0 18.0 18.0 19.8 19.8 18.8 18.8 18.9 18.9 18.9 18.9 18.9 18.7 18.7 18.8 18.8 18.9 18.9 18.9 16.2 6. Discount Rate or Bank 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 12.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 16.0 12.0 12.0 12.0 12.0 12.0 Rate 7. Savings 3.2 3.5 3.4 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.5 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.4 3.1 3.1 3.1 3.2 3.2 3.2 3.2 3.2 3.1 Deposit Rate 8. Overall Time Deposits 9.0 7.6 9.3 8.1 8.7 9.0 9.2 9.1 9.1 9.2 9.2 9.3 9.1 9.1 8.6 9.0 9.9 10.2 10.0 8.8 9.0 9.2 8.6 8.8 9.0 10.3 10.9 10.3 10.1 10.3 10.6 Rate 1 month 9.6 6.6 10.8 9.5 9.2 10.1 10.5 10.2 9.8 10.1 10.1 10.2 10.4 10.0 10.5 10.9 11.5 10.6 11.3 10.3 9.8 10.0 7.7 7.8 9.6 12.1 11.1 11.5 12.0 11.1 11.2 2 months 9.5 7.0 10.1 7.4 9.8 9.3 10.5 10.5 10.8 10.7 10.6 10.4 10.0 10.3 7.5 8.6 10.7 11.6 11.2 10.2 9.3 10.4 9.7 9.1 9.9 11.6 12.8 12.4 11.5 11.1 11.8 3 months 10.8 8.7 10.9 8.4 9.4 9.7 10.2 9.9 9.7 10.6 10.4 10.2 9.8 11.1 10.2 9.9 10.7 11.0 10.6 9.5 11.0 10.4 10.2 11.4 11.4 10.8 12.4 11.4 11.4 12.0 11.3 6 months 10.6 10.5 10.5 9.8 10.1 10.6 10.2 9.8 9.9 9.6 10.0 10.3 10.1 9.8 9.8 9.6 10.6 10.7 9.7 9.2 10.0 10.5 10.1 10.0 9.6 10.1 11.6 11.6 11.1 11.5 11.5 12 months 10.8 10.7 11.0 10.5 10.7 10.9 10.5 10.6 11.0 10.9 11.0 11.2 11.0 11.0 11.3 11.6 11.8 12.4 12.4 11.5 11.5 11.4 10.9 11.0 10.8 12.1 12.0 12.1 12.0 12.1 11.9 24 months 9.0 6.5 8.7 8.4 9.3 9.4 9.7 9.9 9.8 9.9 9.7 9.9 9.4 9.2 8.6 9.6 11.6 12.7 12.0 8.1 8.6 8.8 8.3 9.4 8.8 12.2 13.0 9.8 9.8 11.0 12.8 9. Negotiated 10.0 9.7 9.4 9.5 9.4 8.6 11.3 11.4 11.7 10.9 10.4 11.2 11.3 11.2 11.0 10.9 11.4 11.2 11.9 11.8 12.0 11.7 12.0 11.3 10.9 12.0 12.8 12.6 12.8 12.6 12.5 Deposit Rate 10. Overall 15.7 16.1 16.1 16.2 16.1 16.1 16.1 16.1 16.2 16.1 16.1 16.4 16.3 16.4 16.3 16.1 16.0 16.0 15.8 15.8 15.8 15.7 15.7 15.7 16.0 17.7 17.4 17.9 17.6 17.4 17.6 Lending rate Short-term 14.2 14.4 14.3 13.7 14.3 14.7 14.3 14.4 14.3 14.1 14.1 14.2 14.3 14.2 14.6 14.0 14.2 13.7 13.3 13.4 13.2 13.4 12.8 12.9 14.2 18.4 18.1 17.7 19.1 18.2 18.9 (up to 1year) Medium-term 16.3 16.8 16.3 16.3 16.8 16.6 16.9 17.2 17.2 17.2 17.3 17.7 17.8 17.8 17.6 17.6 16.1 17.1 16.6 16.6 16.9 16.5 16.4 16.7 16.7 18.5 18.5 18.5 19.1 19.0 18.9 (1-2 years) Medium-term 15.3 16.9 16.9 17.3 16.5 16.5 16.5 16.4 16.6 16.5 16.6 16.5 16.5 16.5 16.0 15.9 16.3 16.1 15.9 15.9 15.7 15.9 15.7 16.2 16.0 17.9 17.3 19.0 17.4 17.0 17.2 (2-3 years) Long-term 15.3 15.0 15.5 15.9 15.4 15.1 15.5 15.4 15.2 15.1 15.1 15.9 15.8 15.7 15.6 15.7 15.7 15.6 15.6 15.7 15.8 15.4 15.6 15.2 15.4 17.7 17.2 18.9 17.6 17.5 17.8 (3-5 years) Term Loans 17.3 17.6 17.6 18.0 17.4 17.5 17.2 17.3 17.7 17.5 17.7 17.7 17.1 17.9 17.7 17.5 17.5 17.6 17.4 17.5 17.5 17.6 17.8 17.4 17.7 15.7 15.7 15.5 14.9 15.3 15.4 (over 5 years) 11. Negotiated 12.6 12.3 12.0 12.5 12.7 12.3 12.9 11.8 13.8 13.8 13.7 14.4 12.2 12.0 11.3 12.2 11.8 12.1 12.0 11.9 12.3 12.3 13.1 12.5 13.4 17.1 17.3 15.3 16.9 17.3 17.3 Lending Rate B: Foreign Currency Savings 0.8 1.0 1.0 0.9 1.2 1.2 0.7 2.0 1.8 1.1 0.9 0.8 1.0 1.2 1.0 1.8 1.6 1.6 1.4 1.4 1.4 1.4 1.5 1.7 1.3 1.0 0.8 0.7 0.8 0.3 0.3 Deposits Rate Overall Time 3.5 3.6 3.7 3.5 3.3 3.3 2.7 2.9 3.0 2.6 2.7 2.8 2.5 2.7 3.3 2.7 2.8 2.3 2.7 2.3 2.5 2.4 2.5 2.9 2.1 4.0 3.4 3.7 3.1 4.0 3.7 Deposits Rate 1-months 3.2 3.3 3.7 3.6 4.2 4.2 2.5 2.9 3.4 2.2 2.4 2.6 1.7 2.7 2.9 2.4 2.9 3.0 1.8 1.7 2.1 2.6 2.8 3.1 2.2 3.5 2.7 3.3 3.6 3.2 4.1 2-months 3.2 3.7 3.7 3.1 3.8 3.8 2.7 2.6 2.6 2.4 2.7 2.5 2.5 2.8 3.4 2.8 3.4 2.3 3.5 2.2 3.1 2.9 2.8 3.4 1.8 4.5 3.3 4.3 2.7 4.9 3.6 3-months 3.5 3.5 2.9 3.7 2.6 2.6 2.5 2.9 3.2 2.7 2.8 2.6 2.7 2.3 3.3 2.9 3.3 1.7 2.6 3.1 2.9 2.7 3.0 3.9 2.1 3.6 3.2 3.6 0.7 4.3 3.6 6-months 3.4 4.1 4.2 3.6 2.9 2.9 2.6 3.1 2.9 2.7 2.8 3.0 2.8 2.8 3.5 2.5 2.6 2.3 2.7 2.8 2.5 2.2 2.2 1.7 2.1 4.5 3.2 4.1 4.8 4.0 3.7 12-months 4.4 3.4 4.0 3.3 2.9 2.9 3.0 3.1 2.8 3.1 3.1 3.4 2.9 3.1 3.3 3.0 1.8 2.2 3.0 1.8 1.7 1.7 1.8 2.5 2.2 3.7 4.4 3.4 3.7 3.7 3.7 Overall 6.1 6.0 5.8 5.5 5.4 5.4 6.6 5.8 5.4 5.9 6.4 6.7 6.5 6.8 4.8 6.8 6.9 6.9 7.4 7.4 7.4 7.4 7.5 7.1 7.3 8.5 8.6 8.5 8.3 8.5 8.4 Lending Rate Short-term 3.5 3.4 3.2 3.1 2.8 2.8 4.7 4.0 3.2 3.3 3.2 4.2 3.2 4.2 4.2 3.1 5.1 5.0 5.4 5.4 5.3 5.4 6.2 4.5 6.0 9.3 9.3 8.7 9.3 9.3 9.5 (up to 1year) Medium-term 6.6 6.6 6.6 6.0 6.1 6.1 8.2 7.5 6.2 6.0 7.5 7.7 7.7 7.7 7.3 8.7 7.7 7.8 7.9 8.0 7.8 7.8 7.8 7.9 7.6 7.9 7.9 8.2 7.7 7.8 8.2 (1-2 years) The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Medium-term 7.8 7.6 6.1 6.1 6.1 6.2 7.3 8.4 7.6 8.2 8.1 8.1 8.1 7.4 3.5 7.2 7.4 7.8 8.1 8.1 8.1 8.1 7.5 7.4 7.3 8.3 8.6 8.3 8.4 8.9 8.3 (2-3 years) Long-term 6.3 6.3 6.1 6.2 7.0 7.1 8.0 4.1 5.1 7.0 7.0 7.6 7.5 8.1 5.7 7.0 6.6 6.6 6.8 6.7 6.8 6.8 7.0 6.7 6.7 8.3 8.3 8.4 8.2 8.2 8.2 (3-5 years) 67 PAGE Term Loans 6.1 6.1 7.1 6.2 5.1 5.1 5.1 5.1 5.1 5.1 6.1 6.1 6.1 6.5 3.2 7.8 7.4 7.5 8.9 8.9 8.8 8.9 9.0 8.9 8.9 8.8 8.8 8.9 7.8 8.3 7.7 (over 5 years) Source: Bank of Tanzania TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Annex 12: Food Crops Prices ( National Averages, TZS per 100Kg.) Month-Year Beans Maize Rice Round Potatoes Sorghum Jan-14 137,264.5 56,152.2 124,104.1 72,145.3 75,424.5 Feb-14 137,264.5 56,152.2 124,104.1 72,145.3 75,424.5 Mar-14 141,476.6 50,631.8 128,952.7 69,177.7 70,264.0 Apr-14 138,796.2 49,970.1 135,418.1 67,985.9 68,285.4 May-14 141,766.7 48,110.6 134,265.6 69,550.7 74,421.2 Jun-14 139,048.5 48,098.8 123,059.6 62,664.0 69,972.3 Jul-14 130,471.5 44,931.7 116,644.3 63,838.5 64,965.8 Aug-14 130,655.8 41,414.1 113,291.4 68,420.5 55,512.1 Sep-14 133,969.9 40,551.8 115,674.8 67,112.0 56,082.5 Oct-14 142,283.3 39,020.0 123,561.7 68,639.3 62,631.2 Nov-14 146,785.5 38,189.5 135,062.1 69,846.3 58,266.1 Dec-14 148,541.0 38,781.3 141,923.1 73,360.5 66,382.6 Jan-15 153,210.0 37,929.0 144,929.0 73,316.0 63,886.0 Feb-15 150,431.0 37,205.0 149,765.0 69,975.0 62,227.0 Mar-15 149,534.0 39,940.0 161,422.0 68,249.0 63,548.0 Apr-15 151,733.2 48,628.0 166,901.5 71,221.0 65,778.7 May-15 156,789.3 47,163.3 162,701.7 77,508.5 69,222.2 Jun-15 163,722.7 47,428.9 155,359.9 77,753.4 69,381.4 Jul-15 158,313.3 52,153.8 153,401.8 71,723.0 67,396.6 Aug-15 158,477.3 56,310.0 158,170.5 73,095.8 78,477.5 Sep-15 158,241.3 56,839.9 161,727.1 70,011.2 69,547.8 Oct-15 164,536.8 58,009.3 170,588.5 79,483.4 76,586.1 Nov-15 174,852.7 63,403.9 176,644.3 87,658.8 73,399.1 Dec-15 172,852.5 65,103.5 176,237.1 82,790.7 81,638.1 Jan-16 173,501.3 67,044.9 178,803.4 78,980.5 85,906.5 Feb-16 171,919.0 67,316.0 184,137.0 77,635.0 92,338.0 Mar-16 158,487.4 64,206.9 178,886.3 77,352.7 91,720.6 Apr-16 151,563.0 57,944.7 174,746.3 86,147.2 90,966.1 May-16 150,429.7 54,992.3 158,951.0 91,921.1 93,853.6 Jun-16 149,124.8 53,987.4 148,128.8 89,686.5 97,810.8 Jul-16 149,624.0 55,803.0 144,652.1 84,006.7 89,777.2 Aug-16 149,699.1 55,855.5 139,595.8 82,074.3 89,885.7 Sep-16 151,356.5 56,984.0 138,550.5 77,548.2 84,896.4 Oct-16 164,655.8 64,054.5 145,466.1 81,764.0 96,777.5 Nov-16 169,725.8 72,620.2 147,787.4 81,385.9 102,690.8 Dec-16 171,742.9 85,159.8 152,274.2 79,426.4 104,545.1 Jan-17 175,602.4 93,356.3 162,745.3 83,467.5 94,899.7 Feb-17 179,461.8 101,552.9 173,216.4 87,508.7 85,254.4 Mar-17 180,705.0 103,143.0 171,760.0 78,960.0 117,288.0 Apr-17 182,930.0 106,077.0 177,932.0 81,556.0 133,440.0 May-17 176,695.0 94,915.0 177,830.0 84,572.0 123,913.0 Jun-17 171,701.0 81,938.0 175,283.0 82,145.0 117,939.0 Jul-17 165,057.0 69,693.0 170,895.0 77,478.0 101,856.0 Aug-17 168,027.0 57,629.0 170,855.0 70,653.0 95,879.0 Sep-17 172,795.0 56,401.0 179,845.0 68,494.0 88,864.0 Source: Ministry of Industry, Trade, and Marketing PAGE 68 Annex 13: National Debt Developments (Million US$) USD mn 2015/16 2016/17 Item July Aug Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July 1. Overal Total Debt Committed/2 20,624.9 20,633.6 23,780.7 24,501.9 24,480.2 24,360.8 24,230.1 24,007.7 24,884.3 24,875.7 25,375.1 25,518.3 25,628.6 26,153.2 26,340.2 Disbursed outstanding debt 13,946.0 14,013.6 16,099.5 16,228.0 16,225.0 16,075.9 16,032.3 15,978.1 16,111.1 16,190.9 16,354.0 16,491.5 16,636.0 17,211.5 17,468.5 Undisbursed debt 6,678.9 6,620.0 7,681.1 8,273.8 8,255.3 8,284.9 8,197.8 8,029.6 8,773.3 8684.8 9,021.2 9,026.8 8,992.6 8,941.7 8,871.7 2. Disbursed Debt by Creditor Cate- 13,946.0 14,013.6 16,099.5 16,228.0 16,225.0 16,075.9 16,032.3 15,978.1 16,111.1 16,190.9 16,354.0 16,491.5 16,636.0 17,211.5 17,468.5 gory/2 Bilateral debt 927.2 929.5 1,109.8 1,119.1 1,127.3 1,106.5 1,076.0 1,104.5 1,113.5 1,121.4 1,142.3 1,142.2 1,146.2 1,147.3 1,159.1 Multilateral debt 7,134.0 7,153.6 8,090.6 8,193.3 8,258.6 8,141.5 8,101.1 8,056.4 8,071.5 8,150.9 8,320.0 8,468.3 8,578.3 8,700.8 8,909.0 Commercial debt 4,841.2 4,863.2 5,449.4 5,460.3 5,382.1 5,373.1 5,403.8 5,358.8 5,419.3 5,410.8 5,378.5 5,379.9 5,412.0 5,859.3 5,890.2 Export credits 1,043.6 1,067.3 1,449.9 1,455.3 1,456.9 1,454.8 1,451.4 1,458.3 1,506.8 1,507.8 1,513.2 1,501.1 1,499.6 1,504.2 1,510.2 3. Disbursded Debt by Borrower 13,946.0 14,013.6 16,099.5 16,228.0 16,225.0 16,075.9 16,032.3 15,978.1 16,111.1 16,190.9 16,354.0 16,491.5 16,636.0 17,211.5 17,468.5 Category/2 Central Government 11,461.1 11,501.8 12,981.4 13,086.1 13,071.1 12,918.0 12,851.5 12,812.7 12,911.7 13,010.9 13,163.1 13,211.0 13,330.9 13,887.6 14,143.8 Parastatal Companies 463.5 431.7 334.1 341.2 341.6 345.7 341.1 312.7 293.5 271.0 275.3 276.3 278.4 278.4 278.4 Private Sector 2,021.4 2,080.1 2,784.1 2,800.7 2,812.3 2,812.2 2,839.7 2,852.8 2,905.9 2,909.0 2,915.6 3,004.2 3,026.7 3,045.5 3,046.2 4. Disbursed Debt by Use of Funds/2 2,267.5 2,278.0 16,099.5 16,228.0 16,225.0 16,075.9 16,032.3 15,978.1 16,111.1 16,190.9 16,354.0 16,491.5 16,636.0 17,211.5 17,468.5 BOP & Budget Support 3,213.6 3,222.6 2,721.7 2,665.9 2,680.1 2,669.1 2,615.8 2,441.0 2,456.4 2,458.9 2,466.1 2,502.7 2,516.1 2,914.2 2,962.5 Transport & Telecommunication 575.0 577.3 3,622.2 3,669.4 3,669.0 3,651.5 3,614.5 3,657.6 3,820.8 3,810.4 3,868.7 3,890.6 3,890.5 3,918.9 3,957.2 Agriculture 2,226.9 2,236.2 618.7 621.1 621.8 619.0 607.2 1,037.3 1,075.7 1,079.8 1,093.4 1,097.1 1,099.3 1,126.8 1,177.4 Energy & Mining 329.4 333.4 2,708.2 2,770.2 3,546.7 3,548.2 3,508.1 2,640.4 2,696.4 2,694.4 2,719.3 2,773.2 2,770.9 2,804.6 2,863.8 Industries 2,143.9 2,153.3 407.1 409.6 403.4 402.0 395.7 400.1 410.7 435.0 440.1 438.1 435.7 438.0 444.4 Social Welfare & Education 605.8 615.6 2,322.4 2,300.0 1,568.8 1,561.4 1,716.4 2,263.9 2,326.1 2,397.0 2,419.9 2,449.6 2,476.7 2,530.1 2,576.5 Finance and Insurance 92.8 94.0 771.0 793.0 762.3 759.4 745.4 739.3 749.2 752.0 758.8 787.9 881.5 901.4 903.0 Tourism 536.6 539.6 44.8 48.2 54.1 53.8 52.9 64.7 70.8 68.1 68.8 67.6 67.5 67.8 67.4 Others 2,491.1 2,503.2 2,883.3 2,950.6 2,918.7 2,811.5 2,776.3 2,733.9 2,505.0 2,495.3 2,518.9 2,484.9 2,497.7 2,509.6 2,516.4 5. Total Amount of Loan Contracted/1 14.8 2.0 6.7 126.2 4.9 25.1 146.4 22.8 35.5 2.4 259.7 116.6 10.7 406.0 0.5 Government 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 400.0 0.0 Parastatal Companies 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Private 14.8 2.0 6.7 126.2 4.9 25.1 146.4 22.8 35.5 2.4 259.7 116.6 10.7 6.0 0.5 6. Disbursements/1 43.9 55.1 92.1 115.9 73.5 37.8 154.5 150.5 25.7 88.9 223.2 129.0 81.7 553.6 125.8 Government 40.6 47.5 55.2 83.1 51.8 18.3 122.5 130.9 19.5 84.7 205.0 30.1 62.4 534.6 124.1 Parastatal Companies 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 Private 3.3 7.6 36.9 32.8 21.7 19.5 32.0 19.6 6.2 4.2 18.2 98.9 19.3 19.0 0.7 7. Actual Debt Service/1 22.5 18.4 59.5 32.9 156.0 42.4 14.7 129.0 39.5 32.6 153.9 106.6 32.0 55.3 1.0 Principal 4.7 13.5 41.1 21.4 100.2 31.7 8.8 104.6 11.8 27.0 102.1 25.5 26.1 44.5 0.0 Interest 17.8 4.9 18.4 11.5 55.8 10.7 5.9 24.4 27.7 5.6 51.8 81.1 5.9 10.8 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 8. Net Transfers/1 21.4 36.7 32.6 83.0 -82.4 -4.7 139.9 21.5 -13.8 56.3 69.4 22.5 49.7 498.3 124.8 9.Total Arrears by Creditors Catego- 3,142.7 3,068.3 2,519.3 2,524.5 2,498.4 2,503.6 2,511.1 2,748.3 2,871.6 2,855.8 2,974.3 3,046.5 2,987.8 3,142.9 2,461.6 ry/2 Principal 1,814.4 1,719.5 1,236.0 1,233.2 1,189.7 1,191.8 1,191.5 1,369.0 1,481.8 1,464.6 1,563.2 1,613.9 1,614.2 1,742.9 1,011.8 Bilateral 429.1 308.2 327.3 327.4 329.1 327.5 327.6 335.9 339.8 338.5 337.5 338.8 339.8 346.8 348.1 Multilateral 33.7 38.9 32.9 32.2 36.0 35.6 35.1 34.0 59.1 36.8 39.9 43.3 38.3 72.0 15.0 Commercial 755.1 782.1 479.5 495.4 455.1 458.6 458.3 525.2 613.4 615.7 642.0 681.3 684.2 730.9 398.4 Export Credits 596.5 590.3 396.3 378.2 369.5 370.1 370.5 473.9 469.5 473.6 543.8 550.5 551.9 593.2 250.3 Interest 1,328.3 1,348.8 1,283.3 1,291.3 1,308.7 1,311.8 1,319.6 1,379.3 1,389.8 1,391.2 1,411.1 1,432.6 1,373.6 1,400.0 1,449.8 Bilateral 673.0 683.8 730.4 735.2 738.4 734.7 733.3 759.4 765.8 767.9 770.6 776.1 781.5 784.8 791.7 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Multilateral 12.8 13.2 7.6 7.6 8.6 11.4 11.5 11.7 13.1 13.1 14.5 16.1 13.9 14.9 15.0 Commercial 440.1 437.2 317.4 319.4 327.3 328.5 332.5 339.3 345.5 341.7 350.6 363.2 367.6 365.7 401.2 Export Credits 202.4 214.6 227.9 229.1 234.4 237.2 242.3 268.9 265.4 268.5 275.4 277.2 210.6 234.6 241.9 10. External Debt Stock 15,274.3 15,362.4 17,382.9 17,519.3 17,533.7 17,387.8 17,351.9 17,357.5 17,500.8 17,582.2 17,765.1 17,924.1 18,009.7 18,611.5 18,918.3 69 PAGE 11. Domestic Debt Stock 3,590.9 3,643.3 4,597.1 4,598.1 4,599.1 4,600.1 4,601.1 4,602.1 4,717.5 4,783.7 4,935.8 4,973.9 5,092.6 5,285.2 5,596.5 12. Total Debt Stock 18,865.2 19,005.7 21,980.0 22,117.4 22,132.8 21,987.9 21,953.0 21,959.6 22,218.3 22,365.9 22,700.9 22,898.0 23,102.3 23,896.7 24,514.8 End Period Exchange Rate 2,086.4 2,136.3 2,178.9 2,176.6 2,171.9 2,175.1 2,171.0 2,172.6 2,222.0 2,226.3 2,223.9 2,227.3 2,229.5 2,230.1 2,231.6 Note: 1) During the period 2) Position as at the end of period. Source: Ministry of Finance and Bank of Tanzania TA N Z A N I A E C O N O M I C U P D AT E NOVEMBER 2017, 10TH EDITION Annex 14: Monetary Aggregates (Percent of GDP, Except where noted otherwise) 2008 2009 2010 2011 2012 2013 2014 2015 2016 Monetary aggregates M3 as % of GDP 22.3 29.6 24.0 23.2 23.2 23.1 21.8 22.7 20.9 M2 as % of GDP 16.3 16.4 17.9 18.0 17.2 17.0 17.6 16.3 17.9 M3 growth rate (%) 18.1 18.5 25.4 18.2 12.5 10.0 15.6 18.8 2.9 M2 growth rate (%) 26.5 19.5 21.8 15.0 16.0 10.9 17.0 13.4 1.9 Domestic credit Total Domestic credit (% of GDP) 11.4 13.7 15.3 17.6 17.0 17.8 21.3 23.9 23.8 Total domestic credit growth ( %) 21.1 42.5 29.2 36.0 14.8 21.1 25.4 26.8 13.1 Private Sector credit ( % of GDP) 10.8 11.6 13.5 14.2 14.2 14.4 16.5 18.2 18.5 Private Sector credit growth ( %) 38.6 32.8 17.6 24.3 18.6 17.1 21.4 21.0 6.9 Interest rates structure Overall Tbills rate ( period average, %) 9.7 10.0 3.9 4.5 10.6 11.9 12.7 10.3 16.2 Average lending rate (%) 15.4 15.1 14.7 14.8 15.1 15.8 16.2 16.0 16.0 Average deposit rate( %) 7.8 6.6 6.3 5.8 7.2 8.8 8.7 8.4 9.1 Source: Bank of Tanzania and IMF Annex 15: Poverty by Geographic Regions Poverty Headcount Distribution of the Poor Distribution of the Population HBS 2011/12 HBS 2011/12 HBS 2011/12 Basic Needs Poverty Line1= TSh 36,482 Urban 15.5 15.9 28.8 Rural 33.3 84.1 71.2 Regions Urban 21.7 14.4 18.7 Rural 33.3 84.1 71.2 Dar es Salaam 4.1 1.5 10.1 Total 28.2 100.0 100.0 Food Poverty Line1 = TSh 26,085 Urban 6.0 17.7 28.8 Rural 11.3 82.3 71.2 Regions Urban 8.7 16.7 18.7 Rural 11.3 82.3 71.2 Dar es Salaam 1.0 1.0 10.1 Total 9.7 100.0 100.0 1 Monthly expenditure per adult Source: National Bureau of Statistics PAGE 70 The World Bank Group Macroeconomics and Fiscal Management Global Practice, Africa Region Annex 16: Business sentiment survey The views of business managers of the top 100 mid-sized companies in Tanzania have been collected every six months since April 2013. However, in December 2016, it was collected after 12 months. This data is collected by KPMG through electronic questionnaires, with anonymous responses. In June 2017, about half of responding managers assessed the performance of the economy to be worse than in the previous year, while less than one third reported that it had remained the same. Looking forward, 40 percent of the managers were pessimistic about the economy and 36 percent about their own businesses, which is significantly lower compared to the position expressed in December in 2016. Only about 30 percent of the responding managers are optimistic about the economy and their business. How do you believe the Tanzanian economy is performing compared to last year? • In June 2017, only 27 percent of the managers believed that the economy performed better in the last 12 months than the preceding year. • 48 percent of the views were unfavorable, 14 percent lower than in December 2016, still worse compared to years prior 2016. • 25 percent of the managers saw no change, which is 5 percent higher than in December 2016 but slightly lower than in December 2015. How do you expect the Tanzanian economy to perform in the coming year? • In June 2017, only 30 percent of the managers expected the economy to perform better in 2018 than in 2017, slightly higher than 16 percent in December 2016. • 40 percent of the managers anticipated economic to slowdown 2018, which is 15 percentage points lower than December 2016. How do you think that your own business will perform during the next 12 months compared to its current level of performance? • In December 2016, only 18 percent of the managers expected the performance of their companies to improve during the next 12 months. This rate has improved significantly to 28 percent in June 2017. • The rate for those expecting the same performance has increased significantly to 36 percent in June 2017 from 22 percent in December 2016. Source: World Bank and KPMG PAGE 71